Blue World Jobs Report Analysis 08-07-2015

Posted on August 7, 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, August 07, 2015

Brain surgery is not rocket science to a brain surgeon©

The markets don’t like the headline at time of writing, and there could be a few reasons. They might perceive the headlines to be a positive for the economy (which should obviously cause the markets to fall) and think it makes a rate hike more likely. They might think it’s a negative, and therefore signaling a still weak economy. They may view it as good enough to make a rate hike likely but bad enough to signal continued weakness…ughhh. The psychology of the “experts” is an endless exercise in intellectual masturbation. For those of us running real businesses and trying to employ real people there is no indication of significant change in either direction. The labor market remains weak and our decisions must remain cautious.

The unemployment rate is unchanged at a fraudulently low 5.3%. We’ve been explaining that this is caused by a phenomenon where the number of employed people is rising much faster than the number of those entering/re-entering the civilian labor force. We’ve shown that graph over and over, but we decided to take a different approach today. We are posting a table showing the percent changes in some key metrics since January of 2011. We admit even we were startled at the results.

Before we get to that…215k net new hires are reported at the headline with touted upward revisions to May and June of 2015. A closer look shows those revisions total only +14k. The private sector, however, reports only 210k net and only +6k in revisions, the balance coming from additions to government payrolls. Average hours worked remain range bound, those not in the labor force rose nearly 150k, with increases to those marginally attached to the labor force and total discouraged workers leaving more than 97.7 million Americans out of work. The Participation Rate remains at the all-time “recovery” record low of 62.6%

A couple of positives did show up for July of 2015, including some spotty bounce-back in sector wages and a strong diffusion index in manufacturing at 57.5. Unfortunately the latter is in disagreement with most manufacturing sector data from the past year, so let’s hope it signals an uptick in other manufacturing data going forward. Follow the Blue World Economic Index™ for more information.

Below is the table we mentioned showing percent changes in a few key metrics followed by Blue World as well as the Fed as they consider monetary policy. The weakness is striking and may illustrate why the unemployment rate is so misleading even better than the graphs.

The next jobs report release is scheduled for Friday, September 4th. Our written report will be out in the morning and Matt will be analyzing it live on WBBM Chicago AM780 and 105.9FM at about 12:10 Central. Look for the next Blue World Economic Index™ report on Monday, August 31st.

Have a great month, everyone.

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 07, 2015

Blue World Jobs Report Analysis 7-2-15

Posted on July 2, 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

Thursday, July 02, 2015

Brain surgery is not rocket science to a brain surgeon©

OUUUUUUUCH

Policy matters, and these don’t work…unless the goal is to continually weaken the American economy. We need to wake up and realize that 93 million Americans out of work with fewer than 63% of available workers actually participating in the job markets is NOT A RECOVERY!

Last month we were full of optimism and excitement because the report was mixed. Today…not mixed. We can’t even say we’re just 0 for June because all the good numbers from April and May were revised down. June of 2015 has proven to be a blood bath. Want evidence?…the report is so bad the markets can’t even get excited that a rate hike has just been pushed back yet again. Just for the record, Matt was about the only voice predicting there would be no rate hike in June when he was on CBS radio in Chicago for the May report.

Usually we need to dive into the deep end of the data pool to find the true weakness in the report, but today all we have to do is wade into the kiddie section.

Why did the unemployment rate drop? Because the number of those in the labor force fell by double the number of new hires, silly! Yes, 223k net jobs added as the labor force shrank by – wait for it – 432k! The number of those describing themselves as “employed” was down 56k and those identifying as “not in the labor force” swelled by a staggering 640k.

Now, all that is bad but can be summed up by the stat that takes center stage this month. The participation rate had set and been hovering around an all-time “recovery” low of 62.8%. June of 2015 saw that floor breached setting a new low of 62.6%. The chart is included.

There were 223k net new hires and that is the total private sector as government payrolls ended the month even. While below the consensus it is still over 200k which is generally respectable BUT…as we said above, downward revisions totaled negative 60k over the last two months, the work week was stagnant again, wages were flat and actually pulled back .3% to an even +2% for the year.

Is there more weak data in the tables to report? Yes, but we’ve had enough for one day.

Policy matters. These don’t work.

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 Thursday, July 02, 2015

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

©Blue World Asset Managers, LTD Friday, August 01, 2014

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

Brain surgery is not rocket science to a brain surgeon©

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

A Flute With No Holes Is Not a Flute and A Recovery With No Jobs Is Not a Recovery.

Posted on October 12, 2012 by blueworldadmin

Friday, October 12, 2012

In our jobs report analysis last week we said what we’ve been saying for a long time. We are not in a “recovery” because there is no such thing as a “recovery” without an expanding labor market.

So, what should a recovery look like?

Several of you e-mailed or called and pointed out that we’ve been demonstrating what a recovery doesn’t look like, but we haven’t really shown what a real recovery does look like. EXCELLENT POINT. Thank you!

We dropped everything else this week to do the research, compile the data and generate the graphs so you can compare this “recovery” period to those of the past five recessions going back to 1973.

A true economic recovery following a recession necessarily features an expanding labor market. An expanding labor market consists of two key elements. One is the number of people reporting as available to work (the civilian labor force) and the other is the number of the civilian labor force members that have a job (total employed). In order to be in a recovery BOTH of those groups need to demonstrate expansion.

7.8% is not credible because…

As we discussed last week, no one finds a .3% drop in a single month to be credible. With over 12 million people out of work, 100,000 new jobs just can’t move the needle like that. Heck, a couple of months ago an increase of 163,000 jobs (since revised lower) sent the unemployment rate up! How can this be? Without going into the detail, it is very simple arithmetic. If the growth in new jobs outpaces the growth of the civilian labor force the percent unemployed will fall even though things aren’t getting better. So, the labor market is not improving unless the unemployment rate falls in the face of an expanding civilian labor force AND an increase in the number of new hires. Beyond that, it just doesn’t fit with all the other data out there. For example, we need about 250,000 new jobs per month just to break even! Our GDP is at 1.3% (about .9% if we take out inventories). To get our unemployment rate down to 7.8% our GDP would need to have been about 4%.

Since last we spoke…

We are not conspiracy theorists, but come on… Are we expected to believe the big upward revision in new government jobs was the portion that was slow to report? Are we asked to forget that government jobs don’t signal private sector expansion? We found out that the administration “secured” an agreement with Lockheed Martin to postpone layoff announcements until after the election. On Thursday 10/11 an equally implausible drop in first-time unemployment benefit claims was trumpeted as the best in four years. Hours later we learned that California’s count wasn’t included. When we add that, the numbers aren’t so good and, of course, last week’s numbers were revised up. Like we said last week, if these are the shenanigans we know about…

OK, so what does a real economic recovery look like? Below are graphs showing the size of the civilian labor force and the number of employed people from the official beginning month of the recessions going back to 1973. The graphs extend out for the first forty months of recovery following the official end of each recession which is where we are with the most recent September 2012 jobs report.

♫ ♪ One of These Things is Not Like the Others… ♪ ♫

It makes sense for Big Bird to be a media headliner this week because our analysis is no more complicated than applying the Sesame Street Rule; One of These Things is not Like the Others!! Please note the movement of the labor force size and the number of employed people. The current “recovery” profile does not resemble any of the past 5 recoveries as the labor force size is flat. That’s the key to the falling rate. The final graph shows the participation rate. As you will see the participation rate had been quite stable for the prior 4 years and then plummeted during the “recovery.” This validates the graph showing virtually no material movement in the size of the labor force while jobs are added moving the lines closer together. This gives us a lower unemployment rate even though the labor market is not improved.

All data for the graphs was acquired from the official Bureau of Labor Statistics historical tables which can be found at http://www.bls.gov/cps/cpsatabs.htm

This last graph shows the percentage of prospective workers who are actually participating in the labor market. This is what is meant when you hear about all the people who have given up and left the labor market.

It’s striking. Even the recessions that only last a few months demonstrate an increase in labor force size. It has never been stagnant like it has been for the last forty months!

So, comparing this recession-recovery period with the previous five indicates a dramatic difference between the profiles.

Someone could tell us that this “recovery” is a flute. If we didn’t know better we might believe it. We could repeat it. We could even broadcast it. But even Big Bird would never be able to blow hard enough to make music with it…because it’s not a flute.

As always, thanks so much for reading. We hope you enjoyed it and stay tuned…

Every effort is made to ensure accuracy of data transcription but accuracy cannot be guaranteed. Referenced sources should be reviewed. Any analysis represents the opinion of Blue World Asset Managers, Ltd. who does not warrant or guarantee predictions based on its analysis.