Category Archives: employment

Employment Situation, August 2017

September 1, 2017 By in employment, Employment Situation report, Uncategorized Tags: , , Leave a comment

The Bureau of Labor Statistics issued its monthly Employment Situation for August on schedule at 8:30 edt this morning.

For the first time in a while, the results were mildly disappointing, in that:

–new positions added came in at +156,000 jobs, lower than in the recent past–although more than enough to absorb new entrants into the workforce

–the past two months’ results were revised downward by a total of -41,000 jobs

–wage gains continued to show no signs of the acceleration that economic theory, and past experience, predict will happen in a tight labor market.   Wage growth remains at a +2.5% pace for the past year.

 

It will be interesting to see what Wall Street makes of the numbers.  Pre-market S&P 500 futures were trading a +5.75 points just before the release and seem to be showing almost no change as I’m writing this at about 8:40.

To my mind, that’s the right response.

However, the ho-hum attitude could easily be due to the fact that it’s the last Friday in August and all thoughts have already turned to Labor Day.  There’s also a distinct Fall feel in the air, which may be another distraction.  The Amazon-Whole Foods combination has focused a lot of stock market attention on forces of structural change that have been in motion for a decade or so but are only now coming fully into the public, and press, consciousness.  That puts them squarely (even if that’s mixing metaphors) in the wheelhouse of algorithmic traders.  Then, of course, there’s Houston and Harvey.

By the way, continuing to ramble, the way the market closes today–both overall and with individual stocks–may give some hints as to how Wall Street will react as powerful traders return to work from the Hamptons next week.

Employment Situation, July 2017

August 4, 2017 By in employment, Employment Situation report, Uncategorized Tags: , , , , , Leave a comment

This morning the Bureau of Labor Statistics released the latest monthly installment of its Employment Situation report, a long-standing series that monitors the state of the labor market in the US.

The report, a compilation of data from a large number of employers around the country,  estimates that a total of +209,000 new jobs were created last month (I’ve corrected a typo from an earlier version of this post).  Revisions to the prior two months’ data added another +2,000 new positions to that.

The unemployment rate came in at an ultra-low 4.3% of the workforce.  This figure is in line with recent experience, but one which would traditionally be regarded as indicating full employment plus a lot (the idea being that there’s a certain level (4.5%?) of frictional unemployment, basically people quitting one job to take another but not having yet started).

 

In the past, reaching full employment has also made itself known by accelerating wage gains, as employers bid up the price of the additional workers they need and raise wages all around for existing employees to ward off job poaching from rivals.

In perhaps the most perplexing aspect of this recovery, however, there’s still no sign of wage acceleration.  Wages are rising by a tad more than inflation but the rate of growth has remained steady at about 2.5%/year for a long time.

Although the +220,000 figure is 20% higher than the consensus guess of Wall Street economists, the stock market is regarding the ES with a shrug of the shoulders.  Only a sharp uptick in wage growth will make an impact (probably negative, at least at first) on stocks and bonds from this point on.

 

Employment Situation, June 2017

July 7, 2017 By in employment, Employment Situation report, Uncategorized Tags: , , Leave a comment

The Bureau of Labor Statistics released its Employment Situation report for June this morning at 8:30 edt.  The report was a strong one, indicating that the economy added +222,000 new jobs during the month.

Revisions to the so-so reports of the prior two months (made as fuller information comes in to government statisticians from participating employers) were also strong, adding a total of +47,000 positions to the previously estimated gains of +174,000 new jobs for April and +138,000 for May.

The ES is having a positive impact on stock trading in New York today, partly because the numbers are good.  It’s also partly–maybe mostly–because the monthly employment report released by ADT a couple of days in advance of the ES, and which is designed to mimic the ES, reported +158,000 job additions, which was the weakest in that series for a considerable time.

If anything, the June ES gives more encouragement to the Fed to begin in the next month or two its unwinding of unconventional measures to keep long-term interest rates low.

More on this Monday.

 

Employment Situation, May 2017

June 2, 2017 By in employment, Employment Situation report, Uncategorized Tags: , , , , Leave a comment

As usual, at 8:30 edt this morning, the Bureau of Labor Statistics of the Labor Department released its monthly Employment Situation.

The May results were ok, but not great.

The economy added 138,000 new jobs during the month, a reasonable number although one below recent reporting trends.  In addition, results for March and April were revised down by a total of 66,000.  Ouch!

Wage growth remains at an inflation-beating pace of +2.5% but continues to show none of the acceleration one might be hoping for,  given that the unemployment rate has fallen another notch to 4.3%.

my take

Let’s separate what’s going on from why it’s happening.

On the second question, I have inklings/prejudices but nothing that I’d care to act on.  My guess/fear is that jobs are being created, but in lower tax-rate foreign jurisdictions (meaning just about anywhere other than the US), and that machines are substituting for domestic labor, thereby keeping wages low.  If that were so, it would imply US employers believe President Trump won’t be able to advance his tax and infrastructure agenda.

But, really, who knows.

On the first, the signs are that after eight years, the US is finally at full employment again.  This would imply what other indicators seem to be showing–that’s there’s no reason to bet that there’ll be any “pent-up,” cyclically unfulfilled demand showing itself in surprisingly strong future consumer spending.

If so, the stock market should move away from cyclical ideas to secular growth and structural change beneficiaries.  In addition, overall annual upward movement in the broad indices should be limited to, at best, 1.5x the growth in nominal GDP.

The way I see things, this is the way Wall Street has been acting since early in 2017.  So this ES report is not new news.  Rather it’s confirmation of the direction the market has already recently taken.

 

 

Employment Situation, April 2017

May 5, 2017 By in employment, Employment Situation report, Uncategorized Tags: , , Leave a comment

Happy Cinco de Mayo!

I’ll finish my value investing comment on Monday.

This morning, as usual, the Bureau of Labor Statistics of the Labor Department released its monthly Employment Situation report.

The April ES revises down the weak March figures from +98,000 jobs to +79,000.  However, the April figures have bounced back to +211,000 new positions, well above the recent trend of about +175,000 monthly hires.  This development also suggests that March weakness was a result of unusually warm weather at the start of the year that pulled forward hiring normally done in early spring into late winter.

No sign of accelerating wage gains, though.  Salaries continue to rise at about a 2.5% annual rate.   That’s slightly above inflation.  But despite the unemployment at a 4.4% low, there’s no sign of labor-strapped companies raising the ante in bidding for new employees.  That has been typical behavior in past business cycles, and would create the rising inflation (healthy, at this juncture) the Fed is looking for as a signal to tighten money policy more quickly.

Why is this cycle different?

One plausible alternative is that employees are still scarred by the recession and are afraid to make large wage demands.  Another is that employers are replacing labor with capital, in the form of robots/computers.