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

Blue World Economic Index® Report for March 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, April 03, 2018

 

 

 

 

 

Analysis

The economy is still on the move according to the March 2018 readings. The index advanced led by substantial moves in Employment (no surprise considering the February Jobs Report) and…wait for it…Manufacturing where the advance was entirely from the more objective Non-fed sub-group.

There continue to be some nagging risks, economic and political, out there including, of course, the Fed, lack of inflationary pressure, trade war fears, and – – can’t believe we’re saying this – – porn stars, but the economy appears increasingly resilient in the face of all of it.

The Numbers

The table showing the March numbers is above and we can tell you that April appears off to a strong start. Let’s see if it holds!

The Blue World Jobs Report Analysis will be out Friday morning. See you there!

 

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, April 03, 2018

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