2015

Posted on May 8, 2015 by blueworldadmin

Blue World Employment Situation Report Analysis

Release Date: Usually the first Friday of each month

Market Impact: VERY HIGH

Management Value: CRITICAL

Friday, May 08, 2015

Brain surgery is not rocket science to a brain surgeon©

Don’t the markets just kill ya? The report is weak, BUT the market is flying because…revisions downward last month make the current as-expected numbers look like the economy is improving, but not improving well enough to cause fear of a rate hike by the Fed! WOW! “EXPERTS!” We still remember when economic fundamentals were more important to the markets than government activity speculation!

Yes, revisions are back in the news this month. Over the past three months the net jobs added was reduced by 39,000, giving us a three month average 191k net jobs per month. That includes reducing an already dismal 126k estimate from March down to 85k. When we look at just the private sector, which is what we care about, that drops to 189k per month. That won’t cut it. But, as we know, the unemployment rate and the net number of jobs no longer tells us anything about the health of the labor market because the labor force is growing far more slowly than jobs, giving us that artificially low unemployment rate. That trend continues uninterrupted.

The number of those Not in the Labor Force grew, again, and now stands over 93M, a mark we broke in March. Remember, they are not counted as “unemployed” for the rate calculation because they haven’t looked for work recently. Factor them in, and the true unemployment rate is in the 11% neighborhood while the participation rate is still wallowing around “recovery” lows.

The work week for the private sector is still flat, but some data in the deep end of the pool is more revealing and consistent with other reports from the past months. Manufacturing weekly hours fell to 40.8, a number not seen since April of 2014, but Overtime Hours in Manufacturing is on a four month slide now down to just 3.2 hours per week. We had to go all the way back to July of 2013 to see a number that weak. Hourly earnings are still uninspiring at 2.3% for the full private sector. Construction is the better at 2.6% for 12 months, and manufacturing lags at 1.7%.

The first graph shows the growth of the labor force relative to jobs growth, and the other shows the growth of those Not in the Labor Force. We could have added the Participation Rate graph, but why pile on?

Size 5-15

Not In 5-15

If you’re an “expert” it’s ok to view the report through the prism of paragraph 1. If you invest real money in real business and employ real people, we have no choice but to recommend continued caution, not just due to this report but because of the 40+ reports followed every month by the Blue World Economic Index which remains in negative territory.

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, May 08, 2015

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

Release Site: www.bls.gov

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

©Blue World Asset Managers, LTD Friday, April 03, 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 11-07-2014

Posted on November 7, 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: EVEN HIGHER

Friday, November 07, 2014

What can we tell you? Same ole’, same ‘ole…but we are not blind to the fact that that, in and of itself, it is a slight improvement even if for just one month. We have had many reports over the last several years that were of the copy-and-paste sort, and then we’ve had those that fell well short of copy-and-paste by virtue of the detail exposing the truth about how bad it was in spite of the headline numbers. That might cause copy-and-paste to become a bit of a relief. But let’s be honest, this is not a “good” report, the labor market is not improving, and this is not a “recovery.”

The headline says 214k new hires, but the number we care about, the private sector, only added 206k. Last month we pointed out the Not in Labor Force number was growing faster than the number of new jobs created each month. Some of our “expert” critics are already elbowing us (electronically) this morning about the 206k drop in that stat. Ya know how we keep sayin’ trends and comparisons matter a lot more than data points? Maybe we can teach those “experts” something here. True, the number did drop by 206k, but in spite of that there are still 622k more than there were in October of 2013!! We know our readers get it, but the experts need pictures so we’ll put in the graph later. For now, here is some perspective.

The number of Employed Persons is 147,283M
The number of persons Not in the Labor Force is 92,378M
Since January of 2011 the Labor Force has grown by 2%
Since January of 2011 the number of Employed has grown by 6%
Since January of 2011 the number of persons Not in the Labor Force has grown by 7%

The 2% growth in the labor force vs. the 6% growth in employed people further illustrates why the unemployment rate, as published, is invalid as an economic metric, as well as both being pathetic for a three year period in the United States of America economy!. The work week and manufacturing overtime remain flat, the participation rate is still languishing in record low territory, those unemployed with a Bachelor’s degree or higher ticked up, and meaningful wage growth remains absent. Here’s that Not in the Labor Force graph with the labor force vs employed thrown in for good measure.

Maybe a cubicle-based “expert” can look at 92 million Americans (or whatever) out of work and see a “recovery,” but for those of us insophisticates who just own or manage businesses, invest real money, employ real people and make decisions that actually affect the economy, well, let’s just say “we don’t see a recovery.”

How many times can we say it; policy matters and these aren’t working. Do we have some optimism that the election results from 11/04/2014 can lead to some more effective policies? Yes, but remember, Washington is full of “EXPERTS!”

Thanks for reading and, please, stay tuned…

Release Site: www.bls.gov