Blue World Jobs Report Analysis 8-1-2014

Posted on August 1, 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, August 01, 2014

Brain surgery is not rocket science to a brain surgeon©

We are sending this postcard to the Experts who are cheering the last 2 month’s reports.

Yep, another world beater!

We took July 4^th off and didn’t post a report. We wrote it for the sake of data, but we figured if we didn’t feel like reading it on the 4^th of July, you wouldn’t either. Unfortunately one could read the June post and/or this one and not have missed a thing. This is starting to feel like a soap opera in that once we know the characters we can step away for months, watch one episode and be completely back up to speed.

Will the markets like it? Who knows (or cares)? There has been a fundamental shift in market behavior away from economic fundamentals to a focus on government action; so who cares how they take it? We’re concerned with providing actionable intelligence to the small and mid-sized businesses out there who provide the engine for our nation’s economic growth. In other words, we care about reality in the real world …you know…as opposed to Planet Cubicle where the experts live, work, and analyze data! What does the real world think of this report? The real world knows it remains terrible.

Now that the qualitative pre-amble is over, let’s quantify “terrible.”

Last month’s 298k was actually 270k when we subtract the additions to government payrolls. That 270 would still be a respectable number early in a recovery! The unemployment rate decrease last month was our usual phenomenon of the labor force line and unemployed line moving in opposite directions. That’s how we continue to claim the headline rate as reported is bogus and that position is validated by a participation rate graph that continues to make lower highs and lower lows.

Those things remain true for July. There were only 198k new jobs once we net the private sector with government hires. But guess what?!! The number of those unemployed also grew by…wait for it…197k! The rate ticked up by a tenth, but again, who cares about the rate anymore, especially as the participation rate remains in all-time record low territory at 62.9%. 25+ with a B.A. or better are STILL unemployed at rates over 3%. The Not In Labor Force row from table A tells us there are 92M Americans who didn’t even look for work in the past month. That number is a staggering 2M more than there were a year ago. There were big increases in the number of those out of work for 1 to 14 weeks. In fact, that number alone nearly eclipses the total of new hires for the month. The length of the work week for all employees has not changed in three months while manufacturing hours and overtime both fell posting their worst numbers in the same time period.

Wages? Meh.

So, to all our experts out there who exclaimed “yippee” on the BLS release dates for June and July of 2014, wish you were here!

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, August 01, 2014

Blue World Jobs Report Analysis 03-07-2014

Posted on March 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: VERY HIGH

Friday, March 07, 2014

Brain surgery is not rocket science to a brain surgeon©

Sure, we could sequence copy/paste from last month and call it a day, but if we did that we’d ignore some really high quality comedy! The weather? REALLY? THE WEATHER? This is another absolutely miserable report, but don’t worry, the experts say it’s just due to the weather. Ya know, the really brutal winter… Asking people who invest real money and employ real people to believe that is asking them to believe that the winter of 2014 began in August of 2007! We certainly understand the need to spin this as best as possible for political and keep-the-rank-and-file-in-the-market reasons, but we’re here to help those who seek to exert a positive impact on the economy. We do this by offering an analysis that allows decisions to be based on reality. How many times can we say it – We can’t make the labor market stronger by making the labor force smaller!

You just can’t beat this math phenomenon. Last month we added 145k jobs and the unemployment rate “improved.” This month we add 162k, and the rate gets worse! The “improving” unemployment rate has been due to the problem of a positive denominator outpacing a stagnant numerator. This month that was slightly reversed, as it has been on occasion, but as you’ll see in the graph below it’s the same old pattern. It continues to provide us an artificially low and misleading unemployment rate that can be utilized for headlines but has absolutely no value for investors and business managers.

I know they are reporting 175k new positions, but that includes government jobs. To measure the economy we only care about hires in the private sector, and there we added only 162k new payrolls. The participation rate held at 63% in February 2014 which remains in all-time record low territory. The work week pulled back and remains range bound. What struck us, however, is that it is three tenths of an hour shorter than a year ago. That’s significant. There were noticeable work week decreases in the sector-by-sector analysis including overtime hours in manufacturing, which has now been trending downward for the last four months. The largest declines were noted in construction hours, which is really the only place we can blame the weather at all. Wages remain uninspiring across the board and those who are at least 25 years old holding a Bachelor’s degree or better are unemployed at a rate of 3.4% in February 2014. That number has been on the rise of late and remains in historically unseen territory, the last six years notwithstanding.

Like we always say, one report is never valuable unto itself. Trends are important. There are a multitude of other stats we could cite from this report, but they are predictable and redundant at this point. Instead we offer the following updated graphs to show what we silly non-experts already knew…nothing’s changed!

Thanks for reading and, please, stay tuned…

Release Site: www.bls.gov

©Blue World Asset Managers, LTD Thursday, March 06, 2014

Blue World Jobs Report Analysis 01-10-2014

Posted on January 10, 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, January 10, 2014

Brain surgery is not rocket science to a brain surgeon©

Happy New Year, everyone.

Hey, can you smell that? The jobs numbers are out. Not only do they stink, the headline stinks even worse! We would be remiss if we didn’t mention the claims made by our esteemed leaders that unemployment benefits create jobs. Yes, Pelosi, Obama and Durbin have all said it repeatedly. Based on the record number of those receiving jobless benefits there should be more jobs than available workers to fill them with an unemployment rate less than zero! Sadly, neither is true because…wait for it…unemployment benefits DO NOT create jobs.

The unemployment rate fell .3% to 6.7%! That’s good, right? SORRY. Ask yourself, does it make sense that 74,000 jobs could move the needle .3% when 203K the month before (now revised to 241k) could only move it .2%? We witnessed another huge exodus from the labor force in December, so we continue to see our painfully long trend of more people leaving the labor force than getting jobs. That gives us an increasingly artificial, distorted, misleading and frankly invalid unemployment rate.

There was a decrease of 490K unemployed people, but that isn’t because they got jobs. It’s because they left the labor force as demonstrated by the half-a-million increase in the number of those not in the labor force and a participation rate that matched its HISTORICAL ALL TIME LOW of 62.8%. The number of those at work part-time due to slack work or couldn’t find full-time jobs, marginally attached workers and discouraged workers are all up by dishearteningly large numbers, leaving the more accurate unemployment rate just over 13%. The work week remains range bound and wages grew by a paltry 1.8% year-over-year. That is of concern when considering the Fed’s recent statements regarding anxiety over inflation.

Below are a few striking graphs. The first graph gives us the complete picture of those employed relative to the total available work force for three complete years, 2011, ’12, and ’13. The second demonstrates the hemorrhagic state of the labor force showing the number of those who have left the labor force since 2011. Remember, since they have “left” the labor force, i.e. have not looked for a job in the past four weeks they ARE NOT counted as unemployed. The last one shows the participation rate trend for the same time period. These are so ugly if they were art only a grant from the National Endowment for the Arts would commission them!

Bar - Force vs. Employed

Not in Labor Force 1-14

Participation Rate 1-14

We can’t say it enough, policy matters…and these are not working to the benefit of the American worker, investor, employer and, consequently, family. We remain cautious regarding investments, expansion and hiring.

Thanks for reading and, please, stay tuned…

Release Site: www.bls.gov

©Blue World Asset Managers, LTD Friday, January 10, 2014

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