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Blue World Jobs Report Analysis January 06, 2017

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Blue World Employment Situation Report Analysis

Release Date: Usually on the first Friday of the month

Release Site: www.bls.gov

Market Impact: Usually Very High

Management Value: Critical

Friday, January 06, 2017

Brain Surgery is not Rocket Science to a Brain Surgeon©

part-rate-1-6-17

 

Those who don’t know their history are doomed to repeat it.  Remember, our reports are written to provide real managers who manage real businesses and employ real people with actionable intelligence for strategic planning. We are not spin-meisters for the public markets, any one industry, or any political party or philosophy. We don’t care what works as long as it works. Policy matters, and this policy didn’t work.

The employment report is, in many ways, both a leading and lagging indicator depending on the data viewed and the perspective sought. We must continue to caution against forward-looking reads of this or any of the economic releases for several months as we anticipate significant policy change in the next year. That would not be true had the election gone differently. It will take a while for policy change to impact the data and show up in the reports in such a way as to return to a prospective strategic planning application. The value, of course, is to analyze from a lagging perspective so as to understand policies that have proven ineffective and avoid repeating them in the future.

2016 was dismal from an employment point of view. Surprised to hear it? Not if you read us every month! This report was weak and predictably so, as we’ve had plenty of time for the current policies to establish their effect. The headline shows 156K new hires, but the Private Sector only added 144K. Some “experts” are excusing the December 2016 numbers as there were upward revisions to the prior two months closing the gap on the estimate miss. The problem is that even with the revisions the private sector is still below 200K. With 2016 fully in the books, the sad numbers are that the average payroll gains in the private sector were only 166K. That is far and away the worst monthly average of the second term of the outgoing administration. The Participation Rate is still below 63% and has averaged there all year. That’s the chart this month. The Not in Labor Force statistic is above 95M for a second straight month. Because of those two statistics the fraudulent unemployment rate is, well, fraudulent so who cares.

Remember, there is NO CRIME IN BEING WRONG! The crime is committed when managers fail to acknowledge that policy is not producing the intended result and refuses to make adjustments. This is true whether we’re running a lemonade stand, a multi-national corporation, or an entire country! Do we know if the new policies will work? No. We just know these don’t, and that’s all the reason needed to discontinue and try a different approach. We hope the new administration will be mature enough to change course if they find themselves underperforming economic expectation.

The Blue World Economic Index® for December and year-end wrap is up. January 2017’s BWEI® will be out at month’s end. See you then. Happy New Year and have a great January!

 

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, January 06, 2017

Blue World Economic Index® for December 2016

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Brief Explanation

Blue World Economic Index®

Scale: -2 to +2

Release Date:  Usually the first Business Day of Each Month

Release Site: www.blueworldassetmanagers.com

Management Value: Critical

 

Wednesday, January 04, 2017

HAPPY NEW YEAR!

 

12-dec-2016

 

 

We have said, for so many years, “Policy matters and these aren’t working.” We’ve also pointed out that the markets have become more sensitive to anticipated and announced government action than to actual economic fundamentals. Boy, did this election prove that point! There was a significant move to the North in the BWEI® in the last three weeks of November and continued into December data. The most current and relevant of this data was in the Consumer category where all measures bent sharply upward and continued as cabinet picks, large employer action, and policy hints trickled out (often in 140 characters or less.)

December ended at -.25, up .04 from November. For the year, 2016 was quite weak with the Index posting a twelve month average of -.37, a material deterioration from 2015’s -.11. That’s about the end of the negatives. Six out of eight major categories remain under water but six out of eight also showed material improvement lead by Services, Consumer, and General measures. Manufacturing overall showed a modest improvement (.04) which wouldn’t really be attention getting except that a consistent theme was improved optimism and outlook with a very noticeable jump of .11 in the Federal Reserve Manufacturing Districts sub-group.

Some of us remember that in 1980 it all started with a little optimism. After that, policy has to materialize reasonably near as outlined and the economy can break through.

Policy Matters. Let’s see if a change in direction translates to better success than that of recent times.

The BLS jobs report will be out Friday. Our analysis will follow and then Matt goes live at 12:09p Central on AM780 and 105.9FM in Chicago to discuss it on WBBM’s Noon Business Hour. Click Podcast to find it later in the day.

Have a great January and we’ll see you back here at the end of the month!

 

Every effort is made to ensure accuracy of data transcription but accuracy cannot be guaranteed.  The official release sites should be cross referenced.  The index assignments represent the opinion of Blue World Asset Managers, Ltd. who does not warrant or guarantee predictions based on the index.
©Blue World Asset Managers, LTD Wednesday, January 04, 2017

Blue World Jobs Report Analysis 12/02/2016

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Blue World Employment Situation Report Analysis

Release Date: Usually on the first Friday of the month

Release Site: www.bls.gov

Market Impact: Usually Very High

Management Value: Critical

 

Friday, December 02, 2016

Brain Surgery is not Rocket Science to a Brain Surgeon©

part-rate-11-16

 

 

 

 

 

 

Yup! The “experts” think it’s good. Of course the “experts’ are not making decisions about hiring, purchasing, borrowing…, ya know, all those things required to run a real business. From that point of view, it’s not good. The headline is 178k, but the private sector only added 156k. The average new hires for the private sector are running well below the 2015 average and below 200k at just 164k per month.

At this point our readers know the words to the “Why did the unemployment rate fall?” song. As has been the case for over seven years, the change in employed has outpaced the change in the labor force, moving the lines closer together to give us an artificially low unemployment rate. As a matter of fact, the Not In Labor Force total raced above the 95M mark driving the Participation Rate down to 62.7, the third worst reading in six years. That’s the graph this month, back to 2011. Recovery, indeed!

There is much ado being made of a pullback in wages from last month, but this really isn’t that big a deal considering the year on year rates remain tolerable. We’ll only get nervous if we see an actual backward trend developing. A bigger concern is the continued absolute stagnation in the workweek as well as a Manufacturing Diffusion Index below 50 for a couple of months in a row. A year ago that number was comfortably above breakeven at 55.1 indicating net expansion of payrolls across the 79 manufacturing industries. Not so in ‘16

Did the analysis seem a bit light (less wonky) this month? Economic data comes to us in three levels of timeliness; quarterly, monthly, and weekly so even the most current information is still lagging. For two administrations now, we too often have ended with the phrase “Policy matters, and these aren’t working.” We have plenty of reason to believe that we are about to see a significant change in policy, and that will render detailed analysis of lagging data largely intellectual for a quarter or so until new policies have had a chance to establish an actual vs. anticipated impact. The Blue World Economic Index®, published yesterday, provides a much broader view of this.

This is the last time we will hit the “Publish” button for the jobs report analysis in 2016. We can’t believe it’s another trip ‘round the sun come to an end. As a friend once said “The days are long but the years are short.” God bless you. Merry Christmas. Happy New Year and we’ll see you on the other side.

 

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, December 02, 2016

Blue World Economic Index® for November 2016

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Brief Explanation

 

Blue World Economic Index®

Scale: -2 to +2

Release Date:  Usually the first Business Day of Each Month

Release Site: www.blueworldassetmanagers.com

Management Value: Critical

 

Thursday, December 01, 2016

11-nov-2016

 

 

 

 

 

 

 

 

 

The Blue World Economic Index® showed material improvement for the November 2016 report while still landing solidly in negative territory at -.28. Yes, much of the reporting posted after the election, but we need to remember that most of the data was actually collected well in advance. The December report will give a much clearer picture of whether the economy is following the public markets, whose momentum will be closely watched. The weekly data, however, was more indicative of post-election reaction particularly in the Consumer category, via the Bloomberg Consumer Comfort report, whose northerly movement in the second two thirds of the month was unmistakable, yielding an average of 42.2 in October and 45 for November. While the markets made their moves, the data suggests it was more on the backs of retail traders (TD Ameritrade IMX), as institutional investors (State Street Investor Confidence) were more cautiously contemplating the combined implications of Brexit, POTUS, and further EU escape rumblings in places like Germany and Italy.

Of the eight major categories, six were still negative, but there was notable improvement in five including Consumer, Employment, General, Retail, and Manufacturing which included a bump to the Fed sub-group.

We end most of our reports by pointing out that policy matters…and these aren’t working. We firmly believe there is no sin in being wrong. The sin is committed when we refuse to recognize we were wrong and fail to change policy in response. We think it is safe to say…we’re about to get a look at the effects of some VERY different policy!

 

 

Every effort is made to ensure accuracy of data transcription but accuracy cannot be guaranteed.  The official release sites should be cross referenced.  The index assignments represent the opinion of Blue World Asset Managers, Ltd. who does not warrant or guarantee predictions based on the index.
©Blue World Asset Managers, LTD Thursday, December 01, 2016

Blue World Jobs Report Analysis 11/04/2016

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Release Date: Usually on the first Friday of the month

Release Site: www.bls.gov

Market Impact: Usually Very High

Management Value: Critical

Friday, November 4, 2016

Brain Surgery is not Rocket Science to a Brain Surgeon©

Weak at the headline and worse in the detail…but some media “experts” are trumpeting the great strength???

After a quicker than usual review of the key factors that we usually cite, we will key on what is the Biggest Unreported (except here) Policy-Driven Cataclysm of the 2016 Employment Situation picture. So here we go…

The headline tells us 161k net new payrolls were added for the month of October, 2016. That number unto itself is unacceptable, but the important number of private sector new hires came in at 142k. The Not in Labor Force number jumped back up by over 400k, and the Participation Rate remains stubbornly and pathetically below 63% of able-bodied Americans participating in the labor force. There was a very large jump in those that work part-time because they could only find part-time work, and the Diffusion Index in manufacturing is again below 50 indicating that of the 79 manufacturing industries, over half are stagnant or reducing their labor force.

So, what’s the Big Cataclysm we’re referring to? Net Jobs Added to the Private Sector. The 2014-2015 average new hires for the Private Sector was 238k per month. That’s not stellar but at least flirts with the estimated requirements to break even on additions to the workforce. In 2016 the average through October has fallen to 163k per month. To get back into the 2014-5 range, the economy would have to add over 500k private sector jobs in November and December. Do we need to tell you that isn’t going to happen?

We are regularly asked, “If it’s as bad as you say then why?”

  • Do we hear things are so great in the media?
  • Why are earnings good?
  • Why is the stock market doing so well?

Three simple answers to three very good questions:

  • The media is agenda driven and has a vested interest in people believing things are good.
  • Earnings are good for mega-companies that trade publicly—It’s not the big companies that are suffering. It is the small and mid-size firms that provide the majority of jobs getting killed by anti-employer policies like tax, benefits, and arbitrarily and unconscionably high minimum wage mandates.
  • The markets have ceased being concerned with economic fundamentals and react to anticipated or announced government action, ours and foreign, particularly China.

Here are three better questions:

  • Why is inflation so low after eight years of “recovery?”
  • Why are there still over 94 Million Americans Not in the Labor Force with an uninterrupted upward trend since 2011?
  • Why won’t the Fed raise rates in spite of so many pressures to do so?

Simple answers (because Brain Surgery is not Rocket Science to a Brain Surgeon©)

  • Because the diminished work force won’t allow for demand to increase.
  • Because small and mid-sized firms are being regulated out of growth potential.
  • Because the economic data simply don’t support it. (See the previous two bullets)

Yes, we know there are skeptics and cynics out there who are already disagreeing with us and pointing to some positive hints deep in the weeds of this release. But remember, we view this through the eyes of business owners and managers, not financial industry marketers or politicians. Our goal is to help real businesses make real decisions based on data analyzed from their point of view. To that end let’s look at a couple of remedial facts:

  • 2014-2015 Average Private Sector Hires = 238 Thousand per month
  • Mid 2015 – Present: State, County, Municipal mandates for double digit minimum wage
  • December 16, 2015: .25 Fed Rate Hike
  • 2016 Average Private Sector Hires = 163 Thousand per month

That is a staggering reduction of 43%.  Coincidence? We Think Not!

Policy matters, and these aren’t working.

Happy belated Halloween. Congratulations Chicago. Have a safe, wonderful Thanksgiving and we’ll see you at month’s end for the Blue World Economic Index® report.

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, November 04, 2016