Blue World Jobs Report Analysis March 9, 2018

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

Date: Friday, March 09, 2018

Brain Surgery is not Rocket Science to a Brain Surgeon©

 

 

BRACE YOUSELVES…

WE CAN’T FIND ANYTHING “WRONG” WITH IT!!!

And you know we try! So often is the case that the headlines are contradicted by the detail the deeper we push into the weeds. This works in both directions and for any report, not just jobs. This report has a couple of “weaker” spots but no “weak” ones. We’ll start with those.

Overall, Weekly Hours Worked and Wages were essentially up-less-than-expected to flat as was the number of Unemployed. That’s it.

The Participation Rate bridges the gap between “weak” and “strong” by straddling the line, in as much as 63% is still unacceptably low, but it moved .3% to the North in a single month. You may recall we were horrified the last time it moved that much from one report to the next. We called it virtually unprecedented, and it moved the wrong way. Not this time!

The headlines screamed 313k of which 287k came from the Private Sector. That, plus upward revisions to December 2017 and January 2018 of +54k, brings the 2018 monthly average to the mid-200’s.  The Labor Force grew by an impressive and refreshing 806k. Total Employed grew by 785k, and the Not in Labor Force tally fell by a fabulous 653k. That’s huge. The Diffusion indexes for the Total Private Sector and Manufacturing are massive and flirting with 70. For reference, we saw 30s not so long ago.

Now, let’s get back to hours and wages. There is concern from the “experts” out there this morning that there is still no sign of wage pressure. Au contraire! I guess they just don’t know their way around the deep weeds like we do… Review Table B-3 of the Report. Average Hourly Earnings for All Employees M/M and Y/Y were up .1% and 2.5%, respectively. Both were below most consensus estimates. BUT, Average Weekly Earnings were up 3.1% Y/Y so salaried employees seem to be on the move so Hourly will follow if this holds. Even more important, compensation in the Construction industry came in at Y/Y increases of 3.5% and 4% for Hourly and Weekly, respectively. In our relative world of the past ten years, those are pretty good numbers. The work week for all employees remained range-bound but Weekly Hours in Manufacturing jumped from 41.2 hours to 41.5 hours. That is the highest reading since before 2011 (Chart) and Overtime in Manufacturing hit 3.6 hours. That is only the second time since 2011.

Risks? First and foremost is still the Fed. We don’t want to see rate hikes in anticipation of inflation. We need to see some consistent evidence and inter-report confirmation lest we risk locking up the economic brakes. Second, this report may set unrealistic expectations. A reading of say, 230k in the Private Sector next month may not look so good compared to today’s outsized numbers. Also, beware of revisions. We see them be material time and time again. Today is a great example. Optimism, when supported by trending data, is OK when making strategic business decisions. Euphoria is just plain dangerous!

Matt will be on WBBM’s Noon Business Hour in Chicago at 12:09 CST to break it all down live. That’s AM780 and 105.9FM and the Podcast will post later in the day.

If you missed it, you can review the Blue World Economic Index® for February 2018. We’ll see you back here around the first of April for the next BWEI® Report and the jobs report for March is schedule for release on Friday, April 6th.

Have a great March and may your brackets prove un-bustable!!

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, March 09, 2018

Blue World Economic Index® for February 2018

Brief Explanation

Blue World Economic Index®

Scale: -2 to +2

Release Date:  Usually the Last or First Business Day of Each Month

Release Site: www.blueworldassetmanagers.com

Management Value: Critical

Date: Thursday, March 01, 2018

 

 

 

 

 

Analysis

Confirming our regular observation that stock market performance is not a good proxy for economic health, the U.S. economy remained firmly on solid ground in February 2018 pulling back .04 from its record high .18 for December to its prior record high of .14, but there were some hints at trouble. The first half of the month looked to continue an uninterrupted northerly trend, but then mid-month started getting weird with a huge downgrade to December retail, soft January readings and a sudden build to inventories at the manufacturer and wholesale levels. Retailer inventories remained low, but the obvious concern now is that the motivation to aggressively re-stock may be muted.

The Inflation composite was unchanged at a continued weak -.23. The PPI had been showing signs for months, but the CPI just never followed suit. This month it was the CPI showing a material pop and the PPI showing weakness. The Fed is signaling more rate hikes, and that has spawned “Correction Part Deux” this week. We remain of the opinion that inflation is not a material risk at present based on the inconsistent and non-confirmatory nature of the six reports that comprise the BWEI® Inflation component.

While we still consider the Fed to be the biggest risk to the economy right now, there are several other things we could talk about but only two of real note. First is that the Consumer component is still stratospheric, regularly setting new records, and showing no sign of slowing. Second is the seemingly emergent turbulence in Real Estate as (you guessed it) rates rise. We are starting to see corroboration in other subtle corners of the economy such as the wobbly performance of furniture sales in the last couple of months. 

We’ve already fielded a couple of questions regarding the downward revision to GDP. Fuggetaboudit. The downgrade was largely based on the inventory phenomenon and a blip widening of the trade gap as exports took a hit. That masked what was an otherwise 4%+ report.

The Numbers

We got a little long-winded in the analysis section, so instead of listing out the numbers we decided to just post the composite table for the month. If there are any specific questions, give us a call or ping us through the Blue World contact form.

The jobs report has been scheduled for Friday, March 9th. Our analysis will be up that morning and then Matt will go on the air in Chicago with the Noon Business Hour crew at WBBM AM780 and 105.9FM at 12:09 central time to break it down live. The podcast will post later in the day.

 

Have a great March and may your brackets be un-bustable!!

 

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, March 01, 2018

Blue World Economic Index® for February 2017

Brief Explanation

 

Blue World Economic Index®

Scale: -2 to +2

Release Date:  Usually the Last or First Business Day of Each Month

Release Site: www.blueworldassetmanagers.com

Management Value: Critical

 

Tuesday, February 28, 2017

 

Feb 17 Graph

 

The index is on the move…but still betting on the come! Overall, the composite improved by .08, moving from -.25 to -.16, a healthy jump. Six of the eight major categories are still running in the negative, but six of the eight also improved in February.

From a hundred thousand feet conditions appear to be improving, but the charge is clearly being led by the surveys of anticipation as opposed to the hard data. Is that ok? Of course! As we’ve said, no optimism, no recovery. But the delta is rather striking and nowhere more than in Manufacturing. That category follows twelve reports each month. Six of them make up the Regional Fed Manufacturing Districts sub-group survey reports. The hard manufacturing data actually slipped in February, but the Fed sub-group jumped by .17 to post a +.2! That says managers are optimistic that things are going to pick up rather quickly. Let’s hope it develops that way.

Policy matters, and in fact, anticipation of policy matters. The prospective changes that are being advertised have the general business community and the consumer in a very giddy mood, but we caution it is still just a good mood driven by optimism, so be excited, but don’t bet the farm until the hard data establishes a verifiable trend. The way it’s looking, we still believe that could show early signs before year end.

The Employment Situation Report is scheduled for release on Friday, March 10.  That may delay The Blue World Jobs Report Analysis until Monday the 13th, but if that’s the case it will incorporate the Labor Market Conditions Index analysis so there will be a little more meat on the bone.

 

Have a great 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 Tuesday, February 28, 2017

Blue World Jobs Report Analysis 05-06-2016

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, May 06, 2016

Brain Surgery is not Rocket Science to a Brain Surgeon©

Whoa Ugly

 

 

 

WHOA UGLY!!!                                (Full kudos if you email us with the movie)

 

The “experts” continue to baffle us… not really… Everyone is acknowledging the report is dismal, but we’ve already seen the “positives” in the report being touted by some “experts.” Well, if one only sits in a cubicle analyzing data, we suppose numbers are “positive” if above zero, but that does not necessarily translate to “positive” news on the economy for those who employ real people at real jobs for real wages in the real, outside-my-expert-cubicle world! Let’s dig in…

The headline is 160k, but the news is better for the private sector which came in 11k higher at 171k. If you wanted to leave after the good news…well…have a great weekend.  For the rest of us… Last month we reported the problem with the Private Sector counts being well below the headline and running at 195k for Q1 2016 vs. 222k for all of 2015. 222k is not stellar, but it is at least above 200k. The big news today is actually in the downward revisions to February and March 2016 of -14k and -11k, respectively, bringing the Private Sector average through April 2016 down to 183k. That just won’t get it done, folks.

The Labor Force got smaller, and the Not in Labor Force number got bigger, which ended the recent climb by the Participation Rate in spectacular fashion, which fell all the way back to 62.8%. What that means is that 37.2% of able-bodied, out-of-work Americans are not even participating in the jobs world.  That keeps the number of those not in the civilian labor force at over 94 million.

Some “experts” have said that revisions are minor. No they’re not. (See Private Sector revisions and averages above.)  Some “experts” have said that the news on wages was a positive because they are up .3% YTD and 2.6% since April of 2015.  Looks good from inside an “expert’s”  cubicle…unless, of course, one has reviewed AND remembers the Productivity and Costs report for Q1 2016 which came out a full 48 hours ago showing diminished output on higher pay driving productivity down and labor costs up. In order for wage pressure to be good news for a real manager of real people in the real world, more pay must translate to more productivity. This is why you follow us… The Labor Market Conditions Index will be out on Monday morning which the Fed follows closely. You can see our quick analysis on Twitter @BlueWorldMatt.

The Blue World Economic Index® has taken quite a hit in this first week of May 2016 falling from -.39 to -.44. A lot more data is still to come this month, so we don’t necessarily expect numbers quite that bad to hold but we are prepared to say the Fed meetings will likely be quite the yawners.

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 06, 2016

Blue World Economic Index® for April 2016

Brief Explanation

Blue World Economic Index®

Scale: -2 to +2

Release Date:  Usually the Last or First Business Day of Each Month

Release Site: www.blueworldassetmanagers.com

Management Value: Critical

Release Site: www.blueworldassetmanagers.com

Friday, April 29, 2016

BWEI Graph 4-16

 

 

 

 

 

 

 

 

 

 

 

 

April started out with a little optimism as reporting from March hinted at some possible momentum, then the Empire State Manufacturing Survey kicked off the Fed district reporting at mid-month with solid positives, but it all went South in a hurry.

The BWEI® tied its lowest reading of -.39 since we started making the index available publicly in August of 2014.

Of the 8 major categories, 3 managed readings above 0 including Consumer Measures, which slipped a substantial .5 from .8 to .3.  Real Estate and Services join Consumer on the plus side of zero, and both showed fractional improvements over March. Employment, General Measures, Inflation, Manufacturing and Retail remain in decidedly negative terrain.

We don’t see the Fed making any big moves based on this data, which should make the markets happy but signal defense to those who manage real businesses and employ real people.

Look for The Blue World Jobs Report Analysis next Friday and have a great week.

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 Friday, April 29, 2016