Blue World Economic Index™
Released Thursday, October 01, 2015 for September 2015
The Blue World Economic Index™ came in at .2 for September, 2015 continuing its meander around zero indicating an economy stuck in the mud just waiting for something to happen. Of the major categories employment and manufacturing are performing the worst. This is in spite of the media hype trumpeting gains in the labor market as a prime driver of strong consumer sentiment.
Blue World Economic Index™
Released Monday, August 31, 2015 for August 2015
The Blue World Economic Index™ remains fractionally negative for August 2015 at -.06.vs a -.14 in July. Three out of the eight major categories were negative including Employment, Inflation and Manufacturing while Real Estate made it back above zero for the month joining General and Consumer measures, Services and Retail Sales.
We’ve been asked why Inflation is receiving a “negative” index assignment when it is so low. It is true that rising inflation can be the enemy of growth but when it runs too low for too long it is more an indication of weak demand as has been the case now for several years. We don’t want to see run-away inflation develop but some steady pricing pressure to indicate growing demand would be a welcome change.
We continue to believe a rate hike is not imminent and the Fed will require a great deal more evidence of strengthening.
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
The Blue World Economic Index dipped more negative in July ’15 continuing its meander around zero. 4 out of the 8 major categories were in the negative including Employment, Inflation, Manufacturing, and surprisingly Real Estate with Employment being the weakest at – .93. Consumer measures lead the plus column at .38, but that is down a sizable .36 from last month. General measures, Retail, and Services were also fractionally positive.
The Blue World Jobs Report Analysis will be out next Friday.
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