Blue World Jobs Report Analysis 03-07-2014

Posted on March 7, 2014 by blueworldadmin

Blue World Employment Situation Report Analysis

Release Date: Usually the first Friday of each month

Market Sensitivity: VERY HIGH

Management Value: VERY HIGH

Friday, March 07, 2014

Brain surgery is not rocket science to a brain surgeon©

Sure, we could sequence copy/paste from last month and call it a day, but if we did that we’d ignore some really high quality comedy! The weather? REALLY? THE WEATHER? This is another absolutely miserable report, but don’t worry, the experts say it’s just due to the weather. Ya know, the really brutal winter… Asking people who invest real money and employ real people to believe that is asking them to believe that the winter of 2014 began in August of 2007! We certainly understand the need to spin this as best as possible for political and keep-the-rank-and-file-in-the-market reasons, but we’re here to help those who seek to exert a positive impact on the economy. We do this by offering an analysis that allows decisions to be based on reality. How many times can we say it – We can’t make the labor market stronger by making the labor force smaller!

You just can’t beat this math phenomenon. Last month we added 145k jobs and the unemployment rate “improved.” This month we add 162k, and the rate gets worse! The “improving” unemployment rate has been due to the problem of a positive denominator outpacing a stagnant numerator. This month that was slightly reversed, as it has been on occasion, but as you’ll see in the graph below it’s the same old pattern. It continues to provide us an artificially low and misleading unemployment rate that can be utilized for headlines but has absolutely no value for investors and business managers.

I know they are reporting 175k new positions, but that includes government jobs. To measure the economy we only care about hires in the private sector, and there we added only 162k new payrolls. The participation rate held at 63% in February 2014 which remains in all-time record low territory. The work week pulled back and remains range bound. What struck us, however, is that it is three tenths of an hour shorter than a year ago. That’s significant. There were noticeable work week decreases in the sector-by-sector analysis including overtime hours in manufacturing, which has now been trending downward for the last four months. The largest declines were noted in construction hours, which is really the only place we can blame the weather at all. Wages remain uninspiring across the board and those who are at least 25 years old holding a Bachelor’s degree or better are unemployed at a rate of 3.4% in February 2014. That number has been on the rise of late and remains in historically unseen territory, the last six years notwithstanding.

Like we always say, one report is never valuable unto itself. Trends are important. There are a multitude of other stats we could cite from this report, but they are predictable and redundant at this point. Instead we offer the following updated graphs to show what we silly non-experts already knew…nothing’s changed!

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, March 06, 2014

Blue World Jobs Report Analysis 01-10-2014

Posted on January 10, 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, January 10, 2014

Brain surgery is not rocket science to a brain surgeon©

Happy New Year, everyone.

Hey, can you smell that? The jobs numbers are out. Not only do they stink, the headline stinks even worse! We would be remiss if we didn’t mention the claims made by our esteemed leaders that unemployment benefits create jobs. Yes, Pelosi, Obama and Durbin have all said it repeatedly. Based on the record number of those receiving jobless benefits there should be more jobs than available workers to fill them with an unemployment rate less than zero! Sadly, neither is true because…wait for it…unemployment benefits DO NOT create jobs.

The unemployment rate fell .3% to 6.7%! That’s good, right? SORRY. Ask yourself, does it make sense that 74,000 jobs could move the needle .3% when 203K the month before (now revised to 241k) could only move it .2%? We witnessed another huge exodus from the labor force in December, so we continue to see our painfully long trend of more people leaving the labor force than getting jobs. That gives us an increasingly artificial, distorted, misleading and frankly invalid unemployment rate.

There was a decrease of 490K unemployed people, but that isn’t because they got jobs. It’s because they left the labor force as demonstrated by the half-a-million increase in the number of those not in the labor force and a participation rate that matched its HISTORICAL ALL TIME LOW of 62.8%. The number of those at work part-time due to slack work or couldn’t find full-time jobs, marginally attached workers and discouraged workers are all up by dishearteningly large numbers, leaving the more accurate unemployment rate just over 13%. The work week remains range bound and wages grew by a paltry 1.8% year-over-year. That is of concern when considering the Fed’s recent statements regarding anxiety over inflation.

Below are a few striking graphs. The first graph gives us the complete picture of those employed relative to the total available work force for three complete years, 2011, ’12, and ’13. The second demonstrates the hemorrhagic state of the labor force showing the number of those who have left the labor force since 2011. Remember, since they have “left” the labor force, i.e. have not looked for a job in the past four weeks they ARE NOT counted as unemployed. The last one shows the participation rate trend for the same time period. These are so ugly if they were art only a grant from the National Endowment for the Arts would commission them!

Bar - Force vs. Employed

Not in Labor Force 1-14

Participation Rate 1-14

We can’t say it enough, policy matters…and these are not working to the benefit of the American worker, investor, employer and, consequently, family. We remain cautious regarding investments, expansion and hiring.

Thanks for reading and, please, stay tuned…

Release Site: www.bls.gov

©Blue World Asset Managers, LTD Friday, January 10, 2014

Blue World Jobs Report Analysis 12-6-2013

Posted on December 6, 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, December 06, 2013

Brain surgery is not rocket science to a brain surgeon©

The November jobs report is a great example of why individual reports are not nearly as important as trends. There are some nuggets of encouraging news this time which is in stark contrast to last month. Unfortunately those bright spots are followed by a “but.”

The unemployment rate fell to 7.0% on the creation of 203k new hires. I don’t think we have to explain the math again. The magnitude of new hires outpaced the increase in labor force size, thereby forcing the unemployment rate down in spite of no actual improvement. The 203k includes 7,000 government hires, so the private sector only added 196k.

We acknowledge that some of the data is a little skewed by the return of Federal workers following the shutdown. Those effects will be out of the system by next month, but the impact was fairly minor and actually provided more benefit than harm to this report.

The labor force grew by a respectable 455k in November of 2013, but that was not enough to offset October’s decline of 720k, and we are still below the total labor force size of a year ago. Wages have shown an increase of about 2% which is currently beating inflation. The participation rate popped up by .2, but that keeps it at 63 in all-time low territory and still a huge .6 below November of 2012. The work week got a little longer, but is still range bound. Manufacturing hours, for example, has run between 40.5 and 41 hours per week going back to 2012 with no breakout. We still have over 91 million people out of work, and when those are added to the count used to calculate the rate we are still over 13% unemployment.

Here are the most recent Force vs. Employed and Not in Labor Force Graphs.

Not in Force 12-6-13

Hopefully, this will be the first of reports to start an upward trend. We’ve had a few head fakes like this over the last few years, so here’s to hoping some positives hold and grow.

Matt will be going over this report on WBBM Chicago’s Noon Business Hour at 12:10pm on AM780 and 105.9 FM. A link to the podcast will go out later tonight.

Merry Christmas and Happy New Year from everyone at Blue World. We’ll see you for the first report of 2014 on Friday, January 10.

Thanks for reading and, please, stay tuned…

Release Site: www.bls.gov

©Blue World Asset Managers, LTD Friday, December 06, 2013

Blue World Jobs Report Analysis November 08 2013

Posted on November 8, 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, November 08, 2013

Brain surgery is not rocket science to a brain surgeon©

The Good News Stops at the Headlines…again.

Yesterday I was introduced to a great phrase. In a nod to my friends at Slocum out of Minneapolis I am reporting, “The good news has a lot of hair on it.”

In a quick take on the GDP report that surprised the “experts” to the upside, the news wasn’t very good. The 2.8 percent growth came in .8 percent higher than expected, but of that .83 was inventories, so actual growth was below 2 percent. In addition, the downward trend in personal expenditures that began in 2010 continues. Those are just a couple of the lowlights.

The jobs report didn’t offer much better. The net jobs created in the private sector came in at 212,000. They are reporting 204,000 because that number includes government, which shed 8,000 jobs, so the net private sector number is actually 212,000. While not the 250,000 we need to break even, it sounds better than the low one hundreds we’ve seen lately, right? Sorry.

I hope you’re sitting down.

The civilian labor force dropped by 720,000 dragging the participation rate down a whopping .4 percent to 62.8 percent. To put this in perspective, the records on participation rate go back to 1948. This number is an all-time record low and running 10 points lower than it was at the worst of the recession. I grow so weary of the word “recovery.”

The number of those unemployed rose, and the number of those employed fell by 735,000! The math is simple – 212,000 new jobs, with 735,000 fewer people with jobs, and the number of those reported as not in the labor force soared by…wait for it…932,000.

We appear to be seeing Obamacare’s initial effect on the labor market as those involuntarily working part-time is on the rise for the past three months.

The overall workweek hours, manufacturing hours, and manufacturing overtime hours are all flat while construction’s week shortened by .2 hours.

The conclusion is becoming almost boilerplate, folks. If you invest real money and employ real people, we cannot stress caution enough. The risks are great and many. Fiscal policy is indefensible and not limited to our shores. Bond buying seems to never end, and the markets now celebrate bad fundamentals for fear the Fed will quit “stimulating.” We are not trying to make a living in rational times, and there is no evidence that anyone who could has any appetite to change it. Stay safe out there.

In addition to the print version on December 6^th I am scheduled to do live analysis on Chicago WBBM AM780 and 105.9FM’s Noon Business Hour at about 12:10pm Central. I hope you can make it.

Have a wonderful and safe Thanksgiving.

Thanks for reading and, please, stay tuned…

Release Site: www.bls.gov

Blue World Employment Situation Report Analysis October 22, 2013

Posted on October 22, 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

Tuesday, October 22, 2013

Better late than… Sorry. We can’t back that up.

This is what we waited for? The numbers are short so let’s get to ‘em right away.

The BLS reports total non-farm payroll increased by 148,000 for September. That was a pretty big miss regarding the expectations of the “experts” but it gets worse. In a switch from recent reports, government added 22,000 to the total, making the private sector gains even less inspiring at 126,000. The rate fell to 7.2 percent, but we all know why. The number of those not in the labor force continues its meteoric rise and is mirrored by the participation rate free-fall. The work week, overtime and wage increases remain quite underwhelming as the diffusion rate in manufacturing continues its flirtation with 50.

The Madness of King Market

We’d like to take a moment to focus on the markets. We saw the following headline this morning:

U.S. equity markets rallied after a round of tepid data on the U.S. labor market stoked hopes the Federal Reserve might have to wait until as late as March to begin paring back its massive bond-buying program.

At the top of each jobs report analysis we identify the jobs report influence over markets as VERY HIGH. That remains true, however, it has become for the opposite reason it used to. We remain very skeptical and cautious regarding the markets because, in spite of them doing so for this long, we can’t get comfortable with the idea that bad economic news will perpetually cause the markets to fly because they believe the Fed won’t stop buying bonds. This is very unsettling. The so-called quantitative easing, bond buying, etc., is one of the biggest risks to our long term economic outlook (explained at ) so the markets cause us great pause these days as they put more emphasis on government action than they do on economic fundamentals. Very unsettling.

The next report has been rescheduled for release on Friday, November 8, the second Friday of the month, due to the partial shutdown earlier this month.

Thanks for reading, and please stay tuned…

Release Site: www.bls.gov