Tag Archives: Employment Situation

employment and the March 2016 jobs report

April 4, 2016 By in employment, Employment Situation report, Uncategorized Tags: , , , , , 1 Comment

Last Friday, as usual, the Bureau of Labor Statistics of the Labor Department published its monthly Employment Situation for March 2016.  The report said the economy added 215,00o new positions last month.  Revisions to prior months’ data were insignificant a–a loss of -1,000 jobs.

Despite the continuing strong jobs creation, the unemployment rate ticked up slightly to (a still very favorable) 5% of the workforce.  In the past, that figure would be regarded as full employment. The 5% would be regarded as “frictional” unemployment, meaning it consists either of people who have quit their old job because they have a new one but are not starting right away, or of project workers who routinely have small gaps between jobs.

That would, in fact, be quite worrying, since wage inflation acceleration–and therefore overall inflation acceleration–would be imminent.

The financial markets have not been focused on the very low unemployment percentage, however.  They have been, and continue to be, worried about the lack of wage gains–which, they argue, is evidence of continuing slack in the labor market.

Two recent contrarian thoughts:

–some are saying that the uptick in the unemployment rate is (finally) evidence that disheartened workers who have long since left the workforce (by stopping looking for work) are beginning to think that getting a job is now possible and are re-entering the workforce.  So it’s an early sign of a significantly better tone to the labor market.

I think this is possible.  Good news, if so.  The only question I have is how it could have taken over six years since the economy bottomed for this to occur.

–the Fed is beginning to argue that wage gains are actually greater than corporate reporting would lead us to believe.  The idea is that older, higher-paid workers are retiring and effectively being replaced by younger, lower-paid new hires.  This is something that always happens in the early stages of economic recovery.  Again, the question remains why wage-flattening has been going on for well over half a decade.

More on this topic tomorrow.

 

Employment Situation, October 2015

November 6, 2015 By in economics, employment, Employment Situation report Tags: , , , , , Leave a comment

The Bureau of Labor Statistics, part of the Labor Department, issued its monthly Employment Situation report for October this morning at 8:30 est.

After two below-trend reported jobs gains in August and September, the October figures were very much above trend, at a gain of +271,000 net new jobs.  Revisions to the prior two months were mildly positive, at a total of +12,000, but didn’t change the general picture of shifting into a lower economic gear painted by those ES reports.

The main significance of the October report, I think, is to reaffirm the health of the economy and to remove any hesitation the Fed might have had about raising interest rates slightly next month.

In futures trading, Wall Street is so far taking a ho-hum attitude to this news.  S&P futures have declined by about a quarter of a precent from where they were before the announcement.

 

Employment Situation, July 2015

August 7, 2015 By in employment, Employment Situation report, wage gains Tags: , , , , , Leave a comment

the report

At 8:30 am eastern time, the Bureau of Labor Statistics of the Labor Department released its monthly Employment Situation report for July 2015.

The figures, a gain of +215,000 jobs, all but 5,000 of them in the private sector, were virtually identical with the consensus estimates of domestic macroeconomists.  Revisions of prior months’ data were mildly positive–a total gain of another +14,000 jobs.

Wage gains continued at an unremarkable +2.1% year on year advance.  The unemployment rate remained steady at 5.3%, which is low by historical standards.

significance

It seems to me that this report pretty much removes any doubt that the Fed will begin raising the Fed Funds rate next month.

As I’m writing this, financial markets seem to be taking the news in stride.  We’ll see more as the day progresses.

What this report reinforces, as have prior ES reports in 2014-15, is that the economy in the US is growing strongly enough to create jobs for all those leaving schools and entering the workforce for the first time, plus another one million or so positions a year to eat into the rolls of the unemployed.

 

the May 2015 Employment Situation

June 5, 2015 By in bond market, Constructing a Portfolio, Current Market Thoughts, Employment Situation report, securities markets, stock market, Strategy Tags: , , , , , , , , Leave a comment

the May Employment situation

At 8:30 am, est, this morning the Bureau of Labor Statistics of the Labor Department made its usual release of the monthly Employment Situation.  The report showed the economy added +280,000 new jobs during May, substantially higher than economists’ estimates of +225,000.  Of the total, 262,000 positions were in the private sector, 18,000 in government.

Gains in government employment are almost exactly offsetting declines in mining/oilfield.

revisions

Revisions to prior months’ estimates added another 32,000 to the tally.

Average hourly earnings were up by 2.3%, year on year, showing no acceleration from their recent tepid growth, despite the low current unemployment rate (5.5%) and the sharp employment gains.

why the report in important for investors

What I find interesting is the financial market reaction to the positive report, namely:

–S&P 500 future have declined modestly

–the US$ is up by about a percent against the euro and the yen

–gold is down a percent in dollars (flat in euros or yen)

–in pre-market trading, financials (higher interest rate beneficiaries) are doing relatively well, utilities (whose attractiveness as income vehicles is lessened by higher rates) relatively poorly.

the message

In other words, the message the market is taking from the ES is that the Fed is going to begin to raise short-term interest rates relatively soon (September?).

I think this ES most likely marks an important turning point in market psychology.  Since early 2009, investors have taken heart–and portfolio positioning cues–from the idea that interest rates were extremely unlikely to rise and might possible decline. Investors who adopted an appropriate portfolio structure have been rewarded by seeing rates fall to what were initially undreamed of low levels.

That period is over.

Now rates are highly unlikely to fall and may rise.  Although rates will doubtless rise very slowly and may reach “normal” at much lower levels than in previous economic cycles, this is an important distinction.  It implies that the market will (finally) reorient itself into anticipation of rising rates.  It doesn’t need to have a precise idea of where rates are headed.  The key thing is that the easing trend of the past seven years or so is behind us.

More on Monday.

 

 

Friday’s bad jobs report

April 6, 2015 By in employment, Employment Situation report, stock market Tags: , , , , , Leave a comment

Last Friday morning, the Bureau of Labor Statistics (BLS) issued its monthly Employment Situation report for March.

The numbers were bad.

At a gain of +126,000 positions for the month (+129,000 jobs in the private sector, -3,000 in government), the growth in  jobs was less than half the monthly gains over the past year, which averaged close to +270,000.

Revisions to January and February were also negative.  The February figure was revised down by -31,000 jobs to +264,000 and the January number by -38,000 to +201,000.

Among industries:

–retail trade continued to perk along,

–business and professional services and healthcare continued to expand, although at a slower rate

–most other industries showedd little change in employment, and

–mining fell by -11,000 jobs–presumably as a result of the slowdown in oil and gas drilling.

Although there was no equities trading in the US on Friday, the stock index futures market was open for business until 9:15.  Futures for the S&P 500, NASDAQ and the Dow all dropped by about a percentage point on the ES report.

 

As I’m writing this at about 8:30 today, futures have recovered around a third of Friday’s decline.

 

The most likely explanation for the March weakness is the unusually cold and stormy weather in many of the most highly populated parts of the country during the month.  The revisions to the very strong figures of the two prior months–also plagued by awful weather–are curious only in that they suggest that the firms that were suffering most during the quarter also the ones who dragged their feet in reporting.

To my mind, the weak March ES has no real economic significance.

Today’s reaction to the report in stock trading on Wall Street will be interesting, though,  It will give us some insight into the mood of the market.  A bullish market would shake the news off and end the day up.  A skittish one would use the figures as an occasion to sell off.  So it will be important, I think, to see whether  the market ends up or down, and where the areas of strength and weakness are.