2015

Posted on June 5, 2015 by blueworldadmin

Blue World Employment Situation Report Analysis

Release Date: Usually the first Friday of each month

Release Site: www.bls.gov

Market Impact: VERY HIGH

Management Value: Critical

Friday, June 05, 2015

Brain surgery is not rocket science to a brain surgeon©

Cheers

MIXED!!

Ok, perhaps a bit pathetic to express such exuberance over “mixed” but we have to give credit where it’s due. All the focus will be on the 280k jobs which is a solid post. The problems usually show up below the headlines, and this month is no exception, BUT some of the underlying data support the headline. We haven’t seen that in, well, years! So let’s have a look.

On the plus side…

The headliner is 280k, but the important metric is the private sector tally which stands at 262k, 13k above the twelve month average. The civilian labor force grew, the total employed count rose, the number of those not in the labor force fell slightly below 93M, and private sector payrolls logged a solid gain. Folks, that’s a positive on four out of the first six metrics we use to analyze the report. That is a record for recent times.

Some negatives? Yes. The fact that we got so many jobs with a corresponding increase to the unemployment rate is always a clue that something is amiss. The participation rate ticked up to 62.9, but so what? That is still hovering near “recovery” lows. The total number of those reporting they are unemployed grew, the work week remains tightly range-bound, and wages continue to be uninspiring especially in the face of the exceptionally weak Productivity and Costs report from earlier this week. Of significant note is that the diffusion index in manufacturing has been struggling to stay at 50 and fell below again in May. That tells us the manufacturing sector is in contraction.

The Blue World Economic Index is still slightly negative, with 4 out of 8 segments sporting negative composites so if you employ real people, run a real business, and invest real money we recommend continued caution.

More positives than usual for May of 2015 might be a good start but as we know, it’s not the report that matters. It’s the trend.

So…here’s to hoping for a positive new trend!

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, June 05, 2015

Blue World Employment Situation Report Analysis 05/08/2015

Posted on May 8, 2015 by blueworldadmin

Blue World Employment Situation Report Analysis

Release Date: Usually the first Friday of each month

Release Site: www.bls.gov

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

©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

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