Blue World Jobs Report Analysis 12-6-2013

Posted on December 6, 2013 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, December 06, 2013

Brain surgery is not rocket science to a brain surgeon©

The November jobs report is a great example of why individual reports are not nearly as important as trends. There are some nuggets of encouraging news this time which is in stark contrast to last month. Unfortunately those bright spots are followed by a “but.”

The unemployment rate fell to 7.0% on the creation of 203k new hires. I don’t think we have to explain the math again. The magnitude of new hires outpaced the increase in labor force size, thereby forcing the unemployment rate down in spite of no actual improvement. The 203k includes 7,000 government hires, so the private sector only added 196k.

We acknowledge that some of the data is a little skewed by the return of Federal workers following the shutdown. Those effects will be out of the system by next month, but the impact was fairly minor and actually provided more benefit than harm to this report.

The labor force grew by a respectable 455k in November of 2013, but that was not enough to offset October’s decline of 720k, and we are still below the total labor force size of a year ago. Wages have shown an increase of about 2% which is currently beating inflation. The participation rate popped up by .2, but that keeps it at 63 in all-time low territory and still a huge .6 below November of 2012. The work week got a little longer, but is still range bound. Manufacturing hours, for example, has run between 40.5 and 41 hours per week going back to 2012 with no breakout. We still have over 91 million people out of work, and when those are added to the count used to calculate the rate we are still over 13% unemployment.

Here are the most recent Force vs. Employed and Not in Labor Force Graphs.

Not in Force 12-6-13

Hopefully, this will be the first of reports to start an upward trend. We’ve had a few head fakes like this over the last few years, so here’s to hoping some positives hold and grow.

Matt will be going over this report on WBBM Chicago’s Noon Business Hour at 12:10pm on AM780 and 105.9 FM. A link to the podcast will go out later tonight.

Merry Christmas and Happy New Year from everyone at Blue World. We’ll see you for the first report of 2014 on Friday, January 10.

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 06, 2013

Blue World Jobs Report Analysis November 08 2013

Posted on November 8, 2013 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, November 08, 2013

Brain surgery is not rocket science to a brain surgeon©

The Good News Stops at the Headlines…again.

Yesterday I was introduced to a great phrase. In a nod to my friends at Slocum out of Minneapolis I am reporting, “The good news has a lot of hair on it.”

In a quick take on the GDP report that surprised the “experts” to the upside, the news wasn’t very good. The 2.8 percent growth came in .8 percent higher than expected, but of that .83 was inventories, so actual growth was below 2 percent. In addition, the downward trend in personal expenditures that began in 2010 continues. Those are just a couple of the lowlights.

The jobs report didn’t offer much better. The net jobs created in the private sector came in at 212,000. They are reporting 204,000 because that number includes government, which shed 8,000 jobs, so the net private sector number is actually 212,000. While not the 250,000 we need to break even, it sounds better than the low one hundreds we’ve seen lately, right? Sorry.

I hope you’re sitting down.

The civilian labor force dropped by 720,000 dragging the participation rate down a whopping .4 percent to 62.8 percent. To put this in perspective, the records on participation rate go back to 1948. This number is an all-time record low and running 10 points lower than it was at the worst of the recession. I grow so weary of the word “recovery.”

The number of those unemployed rose, and the number of those employed fell by 735,000! The math is simple – 212,000 new jobs, with 735,000 fewer people with jobs, and the number of those reported as not in the labor force soared by…wait for it…932,000.

We appear to be seeing Obamacare’s initial effect on the labor market as those involuntarily working part-time is on the rise for the past three months.

The overall workweek hours, manufacturing hours, and manufacturing overtime hours are all flat while construction’s week shortened by .2 hours.

The conclusion is becoming almost boilerplate, folks. If you invest real money and employ real people, we cannot stress caution enough. The risks are great and many. Fiscal policy is indefensible and not limited to our shores. Bond buying seems to never end, and the markets now celebrate bad fundamentals for fear the Fed will quit “stimulating.” We are not trying to make a living in rational times, and there is no evidence that anyone who could has any appetite to change it. Stay safe out there.

In addition to the print version on December 6^th I am scheduled to do live analysis on Chicago WBBM AM780 and 105.9FM’s Noon Business Hour at about 12:10pm Central. I hope you can make it.

Have a wonderful and safe Thanksgiving.

Thanks for reading and, please, stay tuned…

Release Site: www.bls.gov

©Blue World Asset Managers, LTD Friday, November 08, 2013

Blue World Employment Situation Report Analysis October 22, 2013

Posted on October 22, 2013 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

Tuesday, October 22, 2013

Brain surgery is not rocket science to a brain surgeon©

Better late than… Sorry. We can’t back that up.

This is what we waited for? The numbers are short so let’s get to ‘em right away.

The BLS reports total non-farm payroll increased by 148,000 for September. That was a pretty big miss regarding the expectations of the “experts” but it gets worse. In a switch from recent reports, government added 22,000 to the total, making the private sector gains even less inspiring at 126,000. The rate fell to 7.2 percent, but we all know why. The number of those not in the labor force continues its meteoric rise and is mirrored by the participation rate free-fall. The work week, overtime and wage increases remain quite underwhelming as the diffusion rate in manufacturing continues its flirtation with 50.

The Madness of King Market

We’d like to take a moment to focus on the markets. We saw the following headline this morning:

U.S. equity markets rallied after a round of tepid data on the U.S. labor market stoked hopes the Federal Reserve might have to wait until as late as March to begin paring back its massive bond-buying program.

At the top of each jobs report analysis we identify the jobs report influence over markets as VERY HIGH. That remains true, however, it has become for the opposite reason it used to. We remain very skeptical and cautious regarding the markets because, in spite of them doing so for this long, we can’t get comfortable with the idea that bad economic news will perpetually cause the markets to fly because they believe the Fed won’t stop buying bonds. This is very unsettling. The so-called quantitative easing, bond buying, etc., is one of the biggest risks to our long term economic outlook (explained at ) so the markets cause us great pause these days as they put more emphasis on government action than they do on economic fundamentals. Very unsettling.

The next report has been rescheduled for release on Friday, November 8, the second Friday of the month, due to the partial shutdown earlier this month.

Thanks for reading, and please stay tuned…

Release Site: www.bls.gov

©Blue World Asset Managers, LTD Tuesday, October 22, 2013

Blue World Employment Situation Report Analysis 9-6-2013

Posted on September 6, 2013 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, September 06, 2013

Brain surgery is not rocket science to a brain surgeon©

Whoa, Nellie!!

Last month we all but hit copy and paste from May because July was just the same ‘ol, same ‘ol after we missed June. This month there is news. Big news…and it does not bode well for the American labor market, and therefore, the U.S. economy. As much as we hate to sound so negative, we ask you to remember that we have to call it like we see it. Spin is available through a million other sources so feel free, but here we want to provide actionable intelligence to our readers, so here goes…

The mundane and predictable, first:

The Bureau of Labor statistics reports 169,000 new jobs created in August of 2013. Of those only 152,000 came from the private sector. The civilian labor force continued to shrink, the total number of employed people fell and those not in the labor force grew by over a half million! More noticeable, the participation rate fell by an attention commanding .2% to 63.2%.

Employment in construction could do no better than break even, and the gain in manufacturing was not enough to offset the July decline.

Average weekly work hours for all employees remained stagnant, with construction and manufacturing following suit.

Hourly and weekly wages grew month over month by .2% and .5%, respectively. Each are up 2.2% and 2.5% year over year which, at present, is just about parity with inflation. That means any increase in inflation will have a negative impact in buying power.

We occasionally report on the diffusion index for the manufacturing industries. There are a total of 81, and the diffusion index indicates the percentage of those industries that are either holding steady or adding jobs. A 50 is a breakeven, so over 50 shows expansion and under shows contraction. This index, in spite of a 3 month uptrend, is still below 50.

To the more extraordinary…

The overall unemployment rate (7.3%) is reported based on the labor force including all those 16 years of age and older. Then the population is broken down into smaller segments which include:

Adult Men 20+
Adult Women 20+
Teens 16 – 19
Whites
Blacks
Asians
Hispanics

A month over month move in any group is usually .1%, maybe .2%. August 2013 saw a .4% rise in the unemployment rate among blacks. That’s a big number.

The REALLY Big News:

Revisions to the numbers go back three months, and then there are annual adjustments. We expect these and track them, but we don’t often see the numbers change like this. Are you sitting down?

The BLS revised the June report from 188,000 to 172,000. That is a significant reduction but not eye popping. The July report, however, was adjusted from 162,000 to 104,000! That is 74,000 fewer jobs created than initially reported in the summer of 2013. So, how do those revisions affect our confidence in today’s report?

We advocate continued caution with regard to investment and expansion. Cash is king, and defense essential to avoid getting caught off guard by sudden shifts. There are lots of things out there right now that can cause sudden shifts.

Have a great month. See you next time!

Thanks for reading and, please, stay tuned…

Release Site: www.bls.gov

Blue World Employment Situation Report Analysis 8-2-2013

Posted on August 2, 2013 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, August 02, 2013

The Song That Stays the Same…

If you’ve ever watched a soap opera, dropped it and picked it up again about a year later you found you hadn’t missed much. It feels like that with this damn jobs report. We missed the June report due to the karate national championships in Greenville, SC. Just a quick shout out to Greenville. What a great town.

Hey, new jobs were created and the unemployment rate fell!! I remember the good old days when news like that signaled an improving economy. Now, as our readers know, it just means that we were on the plus side of new jobs but the number of those reporting as available to work either increased less or, as is the case for July 2013, shrank! That’s right, we added net 162k jobs in July but the civilian labor force got smaller…again. Correspondingly, the participation rate fell by .1 and those reported as not in the labor force grew by nearly a quarter of a million! Many of the job gains came from the lower end in food service and hospitality.

Some other revealing negatives showed up. Wages are down overall and in manufacturing in particular. The work week got shorter for all employees and is back to where it was in July of 2012 but the manufacturing work week has fallen below the one year ago level and overtime hours fell by .2, an unusually large move.

So, what’s new(s)? We have to start to wonder about something. We have been very critical of the use of the word “recovery” over the past many months because we have argued (and defended) a position that we are not in recovery. Trivial data like historically low participation rates, GDP below 2 percent, trendless regional fed reports, etc. tend to cast doubt on recovery assertions. After all, we have just learned that for every job created since the “end” of the recession we have added at least two people to the food stamps rolls. That has never been a sign of recovery in America and we should not accept it as such now or ever. BUT, if we were to concede a recovery by its broadest, most charitable definition we are at a point where we have to ask this. “How long does a ‘recovery’ last?” If the recession ended in 2009 as commonly reported, shouldn’t we have been talking about the recovery in the past tense by now? How many “recoveries” last four years? How many “recoveries” boast stats like these? It just doesn’t hold water, folks.

Investors, business managers and owners, we still urge caution, defensive strategies and avoidance of rose colored glasses brand optimism. It’s still very weak out there with huge uncertainty and risks internationally and domestically. Obamacare implementation is among the biggest. They are trying to deny O-care’s effect on the move toward part-time employment but just take a look at the Employed Persons at Work Part Time section near the bottom of Table A at www.bls.gov.

We hope you’ve all had a great summer and God bless all the kids returning to school. Work hard and remember, never study to “pass the test.” Always study from the point of view “could I explain this to someone else.”

See you in September.

Thanks for reading and, please, stay tuned…

Release Site: www.bls.gov