Category Archives: employment

the Employment Situation, September 2016

October 7, 2016 By in employment, Employment Situation report, Uncategorized Tags: , , , , , Leave a comment

At 8:30 edt this morning, the Bureau of Labor Statistics released  monthly Employment Situation report for September.

The ES estimates the US economy created +156,000 new positions last month.  While enough to absorb the average number of people leaving school and entering the job market for the first time, the figure is below the average of +192,000 jobs created over the past three months.  Revisions to the prior two months’ estimates were also negative, subtracting a total of -7,000 from prior tallies.

For what it’s worth (not much, in my opinion), labor economists had been predicting the figure would come in at +172,000.

It’s important to remember, though, that the unemployment figures are the result of subtracting the number of job gainers from the number of job leavers.  The monthly figure for each is around 3.5 million; the difference between the two is statistically significant only +/- 100,000.

Positives in the report:  wages continue to rise at 2.6% annually; employment in the mining industry, which includes oil and gas, may be bottoming after two years of decline.

 

The real significance of the September ES is in its inoffensiveness.  There’s nothing in it that could even remotely be considered as a check on the Fed’s desire to raise short-term interest rates before yearend.

 

 

 

Employment Situation, August 2016

September 2, 2016 By in employment, Employment Situation report, Uncategorized Tags: , , , , , 1 Comment

This morning at 8:30 edt the Bureau of Labor Statistics of the Labor Department released its monthly Employment Situation.  This was a so-so report.

The economy added +151,000 new jobs last month.  Revisions to the prior two months were -1,000, or insignificant.  Wages were up, but only slightly, maintaining their growth of about 2.4% annually.  Service industries continued to gain; manufacturing and construction were flattish.

The results did fall short of Wall Street economists’ estimates of a +181,000 advance, but to my mind this says more about the economists and the difficulty of forecasting the jobs figure precisely than it does about the jobs.

It there’s one thing I take from it, it’s that the period of turbocharged jobs gains–well over +200,000 a month–we were experiencing earlier in the year is now behind us.  If I were forced to attribute this relative slowdown to anything, it would be the strength of the dollar.

For me, the most curious thing about the report is that it appears to have sparked a rally on Wall Street, on the notion that this report makes it less likely that the Fed will raise interest rates later this month.  This makes little sense to me, although I’ll take an up day rather than a down one any time.  Personally, I think the Fed risks accusations of trying to influence the election if it acts before November, so not matter what its rhetoric it’s unlikely to move now.  Looking at the character of gaining stocks, it’s primarily smaller doing better than larger, something that mostly happens when rates are rising.

This is the first time in a long while I’ve been nonplussed by market movements.

 

Employment Situation, July 2016

August 5, 2016 By in employment, Employment Situation report, Uncategorized Tags: , , , , , 1 Comment

This morning at 8:30 edt, the Bureau of Labor Statistics of the Labor Department released its monthly Employment Situation report for July.

The numbers were strong.

The economy created +255,000 new jobs last month.  Revisions to the prior two months’ data were also positive.  The very weak May figures that caused financial markets alarm bells to ring were bumped up from +11,000 new positions to +24,000; the extra-strong June results edged higher to +292,000 from +287,000.

The effect of this ES report, I think, is to dissipate all the concern about incipient economic weakness that caused the Fed to refrain from raising interest rates at its last two meetings.

Although I’ve never been a big fan of financial companies, traditional banking operations, where interest margins on loans have been severely squeezed by years of easy monetary policy, would seem to me to be the biggest beneficiaries of this development.  My guess is that the ES will also encourage the stock market to continue its drift away from mature cash-generative companies to more capital investment-intensive secular growth names.

Employment Situation for June 2016

July 8, 2016 By in employment, Employment Situation report, Uncategorized Tags: , , , , , Leave a comment

Mutual funds on Monday.  Today’s post is about the blowout jobs number reported this morning.

At the usual time, 8:30 am edt, the Bureau of Labor Statistics of the Labor Department released its monthly Employment Situation report today.  In it, last month’s paltry +38,000 new jobs figure was revised down to +11,000.  But April’s number was revised up by an almost offsetting amount.  More importantly, June’s new hires were reported at a huge +287,000 new jobs.

The June report goes a long way toward convincing economists that the very poor jobs showing for May is a statistical quirk, not a signal of a major slowdown in the US economy.  …the Federal Reserve, too, which had cited the May figure  + possible fallout from Brexit as reasons to refrain from raising the Fed Funds interest rate as planned last month.

 

Pre-market reaction to the news was at first subdued, with S&P 500 futures trading just above breakeven immediately after the announcement.  But while I’ve been writing this, futures have improved to a gain of about 3/4 of a percent.

 

Wage gains, another aspect of the ES that investors have been looking hard at–for signs of incipient inflation, and therefore the need to hike interest rates more quickly to stave off excessive price level gains–were very small.  Over the past year, wages have risen at a 2.6% rate. That’s higher than the current inflation level, but not by much.

All in all, a comforting report.

labor force participation in the US

June 30, 2016 By in employment, Uncategorized Tags: , , , , , Leave a comment

A little more than a week ago, the government released a report by the President’s Council of Economic Advisers on the declining labor force participation among prime-age men.  “Prime-age” is defined as being between 24 and 54.

The gist of the report:

–the US has seen a continuing, steady falloff in labor force participation by prime-age men since the 1960s

–the trend is similar in other advanced countries, but more severe in the the US than anywhere other than in Italy

–the decline comes across all age groups and ethnicities, although the worst experience is among black men

–education plays a part.  In 1964, labor participation among men with a college degree was 98%; last year the figure was 94%.  In 1964, the rate among men with less education was 97%; last year it was 83%

–relative wages for less-educated men have fallen as well, from 80% of the college graduate wage in the 1970s to 60% now

–the mechanism for the decline in participation appears to be that jobs are eliminated during recession, with only some of the positions restored during the ensuing recovery

Two other points:

–the average country in the OECD (Organization for Economic Cooperation and Development = advanced nations) spends 6x the percentage of GDP that the US does on job search and job retraining for people out of work.  That puts the US at the bottom of the OECD pile.  If the unemployment people are anything like the VA, the situation is even worse than the figures imply.

–an unusually large number of US males have been in jail at one time or another in their lives.  They have a particularly hard time finding jobs afterward.

My thoughts:

–the situation described in the report is obviously not new, but, worldwide, we may have reached a tipping point in voter discontent

–economic theory maintains that the best position for a country is to allow free trade.  It stresses, however, that for this openness to create real benefits, governments must step in when globalization causes job losses to retrain displaced workers and reintegrate them into the workforce.  That’s the part Washington seems to have systematically ignored.

The poor employment situation for large chunks of the population is not going to go away by itself.  The solution is probably not to elect a latter-day Ned Ludd, however.  The government shakeup in the UK that appears to be happening in the wake of the “Leave” vote on Brexit may end up being a template for the US as well.