Blue World Jobs Report Analysis 08/03/2018

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: August 3, 2018 

Brain Surgery is not Rocket Science to a Brain Surgeon©

 

 

 

 

Job growth for the private sector continues to advance at an impressive pace. Even though the headline says 157k, the Private Sector grew by 170k as government got smaller by 13k payrolls. Add to that upward revisions to May and June of 59k and we’ve got a really hot labor market! Today’s graph is the Size of the Labor Force vs. Total Employed Workers, and it shows a decidedly expansionary pattern. Review this and our post “A Flute with No Holes is Not a Flute and a Recovery with No Jobs is not a Recovery” from 2012, and you’ll get a very good visual comparison.

The Labor Force grew by 105k, Total Employed grew by 389k and Total Unemployed fell by 284k. The Participation Rate remains stubbornly below 63% at 62.9%, but the Diffusion Indexes show expansion in all private sector industries, including manufacturing, and not by a little. Remember, 50 is a break even on expansion. Both of these are holding in the mid-60’s.

The bellwether sectors of Manufacturing and Construction had another winning month, and part time workers for non-economic reasons are being hired at a break-neck pace (228k) in a mad dash to satisfy backlogs. The importance of that cannot be overstated.

Wages grew, but probably not enough to spook the hawks. That’s good. We still don’t believe inflation is a realistic threat to the expansion right now, and prophylactic moves to “head it off” are ill advised.

The jobs report is corroborated by the balance of economic reporting over the past month, including GDP. You can get a broader look at the economy at the Blue World Economic Index® report which posted earlier this week.

So far, so good in 2018. Expansion is the name of the game. Go for it with the right hand, but always keep the left hand near the brake with a watchful eye on the economy through us!

Matt is on real time today at 12:05p C on WBBM in Chicago to break it down live on the Noon Business Hour, AM780/105.9FM. If you miss it live you can get the Podcast later today.

The next jobs report is scheduled for September 7th. We’ll see you then. Have a great August!

As always, 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 03, 2018

Blue World Economic Index® Report for July 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: Tuesday, August 31, 2018

 

Analysis

It’s that time of the cycle for the BWEI®. There are some major changes due to the quarterly trend analyses which always causes some turbulence, and this time was no exception and, in fact, perhaps the poster child..!  There were a couple of downgrades, but they were the overwhelming exception. We are very cautious about trend changes as they are weighted more heavily than the daily reports, so we tend to let them go a bit to make sure they have legs and that we are not hallucinating a direction.

The economy is just flat out humming, and that is reflected in the composite figures. As a matter of fact, there is only one of the eight Major Categories that remains in negative territory (Inflation), but even it made a Northerly move.

Tariffs have been a concern, but in the closing days of the month it seems they have begun to bear fruit. Please recall what Matt said on The Noon Business Hour last month when asked about the tariff issue. Tariffs can be used in two general ways. One is as actual tax policy and the other is for leverage in ongoing negotiations. In the case of this administration it is decidedly the latter, and despite all the tough rhetoric, the EU and China have taken steps in the direction of the negotiating table.

One report that needs special mention this month is GDP, which released last Friday the 27th. It came in at 4.1% which is huge anyway, but the really big news is that Inventories was a 1% drag on the total. Remember, GDP is the “stuff” that the economy “produced.” It doesn’t mean it got “sold.” We always check the Inventory component to determine the impact it had on the total. It can yield a skewed picture of the economy if GDP is big in part because inventories are up by a material amount in the face of weak sales. It means the “stuff” building up will have to be sold at discounts which hurts inflation, and retailers won’t be moving to replace the “stuff” or hiring more people to sell the “stuff.” In turn, manufacturers won’t be buying “stuff” to make “stuff” or hiring people to assemble “stuff”…so that hurts everything from employment to materials, and on and on throughout the economic web. That is decidedly not the case here. The drop in inventories is corroborated by other consumer spending and retail data from the past month, including today’s Personal Income and Outlays and Employment Cost Index reports.  Additionally, because the Inventories Report from the Census Bureau is a two-month lag, it points to a need to scramble to replenish the “stuff” because it is selling faster than it can be produced, which is a great outlook for the economy starting from employment and traveling all the way through. 

The Numbers

As mentioned above, seven of eight major categories are in the black, and that’s a first. The Composite Index shattered all prior records rising to .43 with advances in Employment, General Measures, Inflation, Manufacturing, Retail and Services. Consumer Measures and Real Estate both retreated a little bit, but the only one of any concern is Real Estate as there may actually be some trouble brewing there as six of nine reports posted negative scores. We’ll have to keep an eye on it.

Watch for the Blue World jobs report on Friday and then Matt goes on WBBM AM780 and 105.9FM at 12:05p Central in Chicago to break it all down live. If you can’t tune in you can get the Podcast here later in the day.

Have a great month and we’ll see you back here for the next BWEI® report at the end of August.

 

 

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, July 31, 2018

Blue World Jobs Report Analysis – June 1, 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: June 1, 2018

Brain Surgery is not Rocket Science to a Brain Surgeon©

 

The report looks great at the headline and most of the detail backs it up. There are a couple of rough spots in the usual places so let’s take a look.

The headline posted 223k net jobs added and the private sector accounted for 218k of those which keeps the 2018 average above 200 and revisions to March and April netted us 15k. The Total Employed rose and the Total Unemployed fell while the Labor Force got a little bigger.

The Participation Rate and Not in Labor Force stats remain stubborn with the former falling a tick and the latter rising for a third straight month and flirting with 96M. The baby boomers retiring is certainly a factor but that bleeding has got to be slowed.

Trade and Transport, Retail, Services, Manufacturing and Construction were all big gainers and wages showed some signs of life with Y/Y up 2.7% for hourly employees and a full 3% for salaried workers. The work week was 34.5 hours long for May which is exactly the average for 2018 to date vs. 34.4 hours for 2016 and 2017.

A stat that is not highlighted too much outside of Blue World’s report is actually the big indicator today. The Diffusion Indexes have remained above 60 for three months in a row. That hasn’t happened in a while and is a great indicator of underlying strength in the labor markets.

Because they are both due today, we’ll combine jobs analysis with a summary of May’s Blue World Economic Index® which actually hit .2 intra-month for the first time since we’ve been publishing it, but just couldn’t hold that level as the Real Estate major category took a beating in the final week. Regardless, the index did advanced to .18, matching the recovery record high set in January of this year.

Matt will be on AM780 and 105.9FM in Chicago at 12:09 today to break down the jobs report live and the Podcast can be found later this evening.

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 01, 2018

Blue World Jobs Report Analysis for May 4, 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: May 4, 2016

Brain Surgery is not Rocket Science to a Brain Surgeon©

 

 

 

 

 

 

 

 

 

This one is decidedly mixed. There is some good and some bad in the places we’ve come to expect.

The headline came in at 164k, but the Private Sector actually added 168k as Government payrolls shed 4k. 168k is not stellar but well within most consensus ranges and keeps the 2018 average at 200k, but that is still on the strength of the incredible February numbers. If we adjust Feb to the average of the other three months the average drops to 160k, but the upward revision of 30k to the last two months helps the outlook. The Labor Force lost 236k, but the Number of Unemployed persons fell by the same amount.

Still disappointing, in our view, the Participation Rate fell to 62.8. There are those “experts” interpreting that as evidence of tight labor conditions when coupled with the diminishing Labor Force. While we get it, we have to take the more cautious approach of noting that the rise in the Not in Labor Force total exceeds the drop in Labor Force size, and there is still no meaningful wage pressure, so we still lean negative on the notion that employment is so great that employers can’t find workers. That’s a tough sell. As we’ve pointed out in the past, there is no such thing as a “jobless recovery.” Add to that, “there is no such thing as full employment without wage inflation.” If employers are adding workers and not having to pay more for them then supply is likely still high. In the Blue World Economic Index® report, posted Monday, we expressed our view that today’s jobs report would be the dove/hawk tie-breaker for the next Fed meeting as the quarterly Employment Cost Index report signaled wage inflation, but the monthly Personal Income and Outlays report did not. Today’s report definitely corroborates Personal Income and Outlays, so let’s hope the hawks remain perched.

The Diffusion Indexes are still comfortably above 50 but posted their second monthly decline in a row and have fallen below their year-ago marks. Manufacturing and Construction had good showings again with regard to payrolls and wages, with Construction jumping 3.7% and 4.2% for Hourly and Weekly pay year over year.

If we were pressed we’d say this report is mixed with a positive lean, but you know we don’t care about any single report, anyway. We care about the trends. In a post from October of 2012 entitled “A Flute with no Holes is not a Flute and a Recovery Without Jobs is not a Recovery”, we compared labor market charts from past recession/recoveries going back to the 70’s to show how the trends in a true recovery look. If we look at today’s chart we can see there is, in fact, finally a robust recovery under way.

Have a wonderful May and we look forward to posting the next Blue World Economic Index® report at the end of the month.

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 04, 2018

Blue World Jobs Report Analysis 04-06-2018

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, April 06, 2018 

Brain Surgery is not Rocket Science to a Brain Surgeon©

Cooling was expected but this was kinda weird. Once we look at all the net-nets it was a mixed report with an unmistakable positive lean even though the headline shows a substantial miss. Getting deep in the weeds and doing a lot more math than usual was key to understanding what this one really said. There are, of course, already thousands of “expert” “analyses” out there by both sides of the political aisle and financial industry with their own slants, so as always, read those for amusement and stay here for the actionable intelligence needed for strategic management decision making!

At the headline we see 103k whereas most consensus estimates called for 175k to 200k. The good news is that of the 103k, 102k were Private Sector adds which also picked up a positive revision from last month pushing the YTD 2018 average over 200k. Most of the positive developments from our go-to stats in last month’s monster report held up and wages hinted at some pressure. The work week length was steady and Manufacturing was a big winner again. The Diffusion Indexes returned from outer space but remained comfortably (and more sustainably) above 60. The table above shows annual averages back to 2014 for some of those key stats and you can see which are stubborn and which are making progress.

Concerns? A few. Retail got beaten up and that is consistent with yesterday’s Challenger layoffs report. Participation Rate and Not in Labor Force numbers continue to disappoint and there were too many Part-Time jobs but that tends to be volatile. We don’t think that this will force the hawks from their perch at the Fed so hopefully they’ll leave rates alone a while longer but they seem to look for any excuse these days.

Overall it was a good March for the economy. The Blue World Economic Index® made a nice move led by Employment and Manufacturing. Services looked good with rare and welcome tri-confirmation of strength despite slight pullbacks in ISM and PMI’s non-manufacturing reports.

From our consulting point of view the light is either Red or Yellow. We’ve never seen a pure Green light but we have perceived some blue tint coming in of late so there may be some Green out there…but we’ll never admit it!

Have a great April and we’ll see you back here in May.

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, April 06, 2018