Blue World Employment Situation Report Analysis 04-03-2015

Posted on April 3, 2015 by blueworldadmin

Blue World Employment Situation Report Analysis

Release Date: Usually the first Friday of each month

Market Sensitivity: VERY HIGH

Management Value: VERY HIGH

Friday, April 03, 2015

Brain surgery is not rocket science to a brain surgeon©

WOW, this is bad. Not unexpectedly bad unless you happen to be an “expert.” We continue to point out how bad the labor market is, and we know that is in stark contrast to what we see in the headlines. This was borne out by a friend who said he reads our reports, but they make him angry. (Thanks for reading and for the input, Mike.) We write these to try and provide managers, business owners and investors with additional actionable intelligence for decision making, as opposed to steering perception so we calls ‘em like we sees ‘em…and what we see is erosion, not “recovery.”

We base our analysis on the numbers and trends, so let’s get to it. We’ve been saying that the number of new jobs created and the unemployment rate no longer matter because the labor force is stagnant. March of 2015 is no exception. The net gain to the private sector was 129k, well below expectation but again, that’s not the news. The real news is that the labor force shrank by another 100k, the Not in Labor Force number grew over a quarter million, and the Participation Rate tied its “recovery” …low?!? Oxymoronic? Yes. Sad and true? Yes.

There was some even more disturbing data in the deep end of the pool. First, those working part time due to slack work conditions grew by over 200k, and second was “news” from the manufacturing sector. News is in quotes because it is only “news” if we don’t follow the monthly regional fed manufacturing activity reports. Fortunately we do. The jobs report includes a diffusion index for the manufacturing sector. A diffusion index is very simple to interpret, because a number above 50 indicates expansion and below 50 shows contraction. The March 2015 diffusion index in manufacturing came in at 47.5. That is bad enough but it becomes virtually catastrophic when we see that February 2015 was 61.3 and a year ago it was 57.5. The number validates what we’ve seen come out of the regional Fed reports, which were red across the board for the internal Blue World Economic Index during March.

For those who invest real money, employ real people, and take real risks so that others may work, earn, learn, and grow we remain grateful and will always do what we can to help make decision making more informed. We feel we owe it to you. For now we continue to recommend you keep the defense on the field.

Happy Easter!

Thanks for reading and, please, stay tuned…

Release Site: www.bls.gov

Every effort is made to ensure accuracy of data transcription but accuracy cannot be guaranteed. The official release site should be cross referenced. The analysis represents the opinion of Blue World Asset Managers, Ltd. who does not warrant or guarantee predictions based on its analysis.

©Blue World Asset Managers, LTD Friday, April 03, 2015

Blue World Jobs Report Analysis 2-6-2015

Posted on February 6, 2015 by blueworldadmin

Blue World Employment Situation Report Analysis

Release Date: Usually the first Friday of each month

Release Site: www.bls.gov

Market Sensitivity: VERY HIGH

Management Value: VERY HIGH

Friday, February 06, 2015

Brain surgery is not rocket science to a brain surgeon©

Hey fellas, Pay Attention!!

It just keeps getting weirder…

There were huge revisions to the upside for December and November 2014, yet the number of those unemployed for less than five to more than 27 weeks jumped. The unemployment rate went up. The participation rate remains below 63%, and the number of those unemployed rose…again. Fuzzy math indeed.

That sums up a lot of the relevant numbers for January 2015, but also of note is that the headline number for this month was 257k new jobs. In a reversal from the norm, the private sector number was better than that (267k) because government reports shedding 10k jobs for the month. Hours and wages for the total private sector, construction and manufacturing remain uninspiring and that is consistent with data from all the other economic releases over the past month. Of particular note are the Factory Orders and Productivity and Costs reports. The number of those at work part-time for economic reasons is up, and sadly, there are 1.1M more citizens Not in the Labor Force than there were in January of 2014.

We follow over forty reports per month, note the data points as they’re published and follow the short and long term trends. We put it all together for an overall profile of our economy and the profile is flat. How many times can we say it? (Rhetorical) Policy matters and these don’t work.

Thanks for reading and, please, stay tuned…

Release Site: www.bls.gov

©Blue World Asset Managers, LTD Friday, February 06, 2015

Key Labor Market Metrics 2011 – 2014

Posted on January 12, 2015 by blueworldadmin

Here are the key metric graphs reflecting the annual data with revisions and including the full years of 2011 – 2014. Revisions were minor and did not alter any of the poor short or long term trends reflected.

Starting at top, left we have the size of the labor charted against the total number of those employed. We can see as the lines converge the unemployment rate calculation will become smaller even though there is no improvement in the labor force. This point is validated moving to the right and then below, left showing the participation rate and the number of those no longer in the labor force. The fact that the graph showing those no longer in the force is rising faster than the total employed line is very unsettling and not recovery-esque. Finally at below, right we see the length of the work week showing a very narrow average over the period.

Blue World Jobs Report Analysis 01-09-2015

Posted on January 9, 2015 by blueworldadmin

Blue World Employment Situation Report Analysis

Release Date: Usually the first Friday of each month

Release Site: www.bls.gov

Market Sensitivity: VERY HIGH

Management Value: VERY HIGH

Friday, January 09, 2015

Brain surgery is not rocket science to a brain surgeon©

Do you hear us, AND ARE YOU LISTENING?!?

Happy New Year everyone! We hope the Christmas season was safe and joyous. Now, back to business. The jobs report is out and we’ll comment on it as usual but we will also offer a bit broader overview of how the economy fared in general for the period of 2011 – 2014. We think you’ll find it rather sobering as we did.

First, the jobs report. Same ‘ole theme of a decent number of new jobs with the private sector breakout sporting a little less luster than the headline number, which came in at 252k, 12k more than the private sector total. The labor force shrank by another quarter million plus so, as has been the pattern, the number of those employed grew at a faster rate, further enhancing the irrelevance of the unemployment rate calculation. The “Not in Labor Force” tally swelled by another half million driving the Participation Rate to equal its “recovery” record low. There were corresponding spikes in the “Marginally Attached” and “Discouraged Workers” yielding a true unemployment rate just north of 11% which is, of course, also optimistic for the same reasons as the headline number. Wages across the board, and notably in construction and manufacturing, took a noticeable hit with some downward revisions to previous periods. The work-week length remained stagnant, BUT there may be a brightening spot. The overtime hours in manufacturing has demonstrated small but nevertheless consistent increases for the 4^th quarter. Let’s hope that holds.

Annual revisions to the prior data will be showing up beginning next month so graphs may look a little hinky as they can at each New Year, but the patterns will be valid. Here are some sobering statistics.

Percent Change for the period:

	2013-2014	2011-2014
Labor Force	0.32%	1.45%
Total Employed	1.64%	4.38%
Participation Rate	-0.61%	-2.00%

This shows quite clearly why we say the unemployment rate as published has lost all credibility and value as a proxy for the health of the labor market and economy at large.

Speaking of the economy at large, well, it’s not declining, but it’s not advancing either. Blue World tracks over 40 reports per month from both private and public sources in the following 8 categories:

General measures (i.e. GDP)

Consumer mood and activity

Employment

Inflation

Manufacturing

Residential Reals Estate

Retail Performance

Services Sector

Of those, in 2014 five categories were in mild positive territory as analyzed internally at Blue World, and three were slightly negative. All told, this is still an economy waiting for a direction. We have repeated the sentiment that policy matters, and it is no secret that we have been very critical of the ones in place. We don’t care what works, just that it works…and these don’t. We voters expressed a desire for policy change, and our new hires will take office this month. Let’s pray they’re listening.

Thanks for reading and, please, stay tuned…

Release Site: www.bls.gov

Blue World Jobs Report Analysis 12-05-2014

Posted on December 5, 2014 by blueworldadmin

Blue World Employment Situation Report Analysis

Release Date: Usually the first Friday of each month

Release Site: www.bls.gov

Market Sensitivity: VERY HIGH

Management Value: VERY HIGH

Friday, December 05, 2014

Whoa! 321k!! Folks, that number by any standard is a solid number. The total we care about is the private sector tally, and even that is a very respectable 314k, net of the 7k new government jobs. Is there still some hair on the good news? Yes, but let’s take a rare moment in recent jobs report history and say November 2014 was a good month for net new job growth. I wish we could end it there, but we are obligated to share the caveats and cautions, so here we go…

The fuzzy math continues to play havoc with the unemployment rate, which didn’t move in spite of the best job growth in a long time. That phenomenon is validated by an unchanged participation rate still languishing in record low territory at 62.8%. Why? Because even though we had 300k+ new jobs, we also grew the unemployed number by 115k and added 69k to the line item total for “Not in the Labor Force.” In fact, the total of those reporting themselves as “Employed” only grew by 4K. Those unemployed between 1 and 26 weeks grew by a worrisome 148k, and the diffusion index in manufacturing, while still well above 50, fell by 1.2%. Wages continue just barely pacing inflation having grown just 2% since November 2013.

As our regular readers know, one of our “go to” metrics when assessing the true health of the labor market is the unemployment rate among those who are at least 25 years old and have a minimum of a four year college degree. Due to their educational attainment bolstered by real world experience, this group has historically been the most bulletproof when it comes to weaker economies and unemployment. That has, unfortunately, not been the case of late so we wanted to share some perspective on how this reflects the poor economy. As of November 2014 the average unemployment rate for this group is 2.8% since the statistic has been recorded. Prior to 2008 the average unemployment rate for this group was only 2.4%. Since January of 2008 the average is 3.9%. Furthermore, this group had never gone more than 13 consecutive months unemployed at a rate of 3% or more, with a record high of 3.4%. They have now spent six consecutive years unemployed over 3% with a record high above 5%.

Coincidence? We think not. Policy matters.

321k is exciting…as long as it becomes the first step in a series of improvements and not just a blip. Let’s hope some meaningful policy course changes are in the works that can render this the first step in establishing a true and sustainable recovery.

Thanks for reading and, please, stay tuned…

Release Site: www.bls.gov