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Notes to myself, possibly of interest to others.
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Monday, December 6, 2010

Rosenberg Daily - Recap of Bad Employment Data

[Today] While the U.S. jobless claims data does suggest that the pace of firing has subsided, it should be abundantly clear that the pace of hiring is also rather anemic.  Hence the near stagnation in U.S. labour force activity.  
This was arguably one of the worst employment reports of the year:
  • The headline nonfarm payroll employment of +39k was well below the +150k the consensus was looking for.  
  • The birth-death factor added a net 15k, so in fact the ‘real’ headline was even weaker at +24k.  
  • Wages were flat for the first time since June.  In the past 12 months, the YoY trend in average hourly earnings has gone from +2.1% to +1.6%.  And it is the service sector that is under the most acute downward pressure – receding to +2% from +3%.  Inflation, indeed.   
  • The Diffusion index is down to 52.0 from 58.0, the lowest level since January 2010.  This means that the number of industries seeing an increase in jobs are becoming less.  The Manufacturing diffusion index ticked down to 43.3 from 43.9, also lowest since January 2010.
  • The workweek also flat at 34.3 hours, another indication that companies were not that busy last month — certainly not straining themselves to meet demand.  
  • The part-time/full-time job split was terrible.  Full-time employment was down 478k, which is six months in a row of declines (worse monthly reading since July 2010).  Part-time employment managed to gain 182k, providing a partial offset.  In the past six months, the U.S. has lost 1.6 million full-time jobs, with just over half being replaced with part-time positions (+878k).  What a labour market!  
  • The unemployment rate ticked back up to 9.8% from 9.6%; the more inclusive U6 rate stayed at a near record high of 17.0%.  The jobless rate for adult males jumped from 9.7% to a seven-month high of 10.0%.    
  • The labour force participation rate was stuck at 64.5% — the lowest since November 1984.  The employment/population ratio (arguably a less biased measure than the unemployment rate) ticked down from 58.3 to 58.2, the lowest since August 1983.
  • The ranks of the unemployed jumped 276k last month, bringing the total level to over 15 million of which 6.3 million have been looking for a job fruitlessly for at least six months.
  • The number of people that were unemployed because they had been laid off or just concluded a temporary assignment surged 390k.  We haven’t seen a number like that since September 2009. This is one of the most vivid signs of labour market weakness and yet this data point, which crossed our desk, was widely ignored in all the Street “analysis”.  
  • Local government was down 14k and is now at the lowest level since September 2006.
  • There are lots of people still having trouble finding jobs.  The median duration of unemployment ticked up 22 weeks from 21 — a four month high.  Note that 41.9% of those unemployed have been so for more than six months, which is slightly higher than in October.
  • The number of discouraged workers who gave up on their job search rose 63k, an all-time high, which is the third increase in a row.   
  • Manufacturing payrolls were down 13k (the fourth decline in a row).  Thank you very much for the heads-up on that one ISM index!  You win the ADP award for prescience!   
  • The jobless rate for Americans with at least a bachelor’s degree rose to 5.1% — up from 4.7% in October and 4.4% in September — the highest since 1970 when records were first kept.  This group represents 30% of the workforce and there are now 2.4 million people here that are unemployed.  So sorry, this profound weakness in the labour market is not merely about a lack of skills for employers to take advantage of, it is about a corporate sector unconvinced that this recovery has enough legs, which is why businesses would rather stash cash than boost their staff loads.

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