Tag Archives: Employment Situation

more employment: the February Employment Situation from the Bureau of Labor Statistics

March 6, 2015 By in Current Market Thoughts, economics, employment, Employment Situation report Tags: , , , , , , Leave a comment

The Bureau of Labor Statistics released its monthly Employment Situation report for February this morning at the usual 8:30am eastern time.  In contrast to the ADP report made public on Wednesday, the BLS figures were unambiguously strong.

The economy gained 295,000 new jobs during February, despite the unfavorable weather.  All but 7,000 were in the private sector.  Revisions of the prior two months subtracted 18,000 jobs from the advance–not a good sign, not a bad one either; the unemployment rate fell to 5.5%.

To me, the key development is that S&P 500 futures are down by more than seven points since the release.  I interpret this as meaning that worries about the ES figures being weak are not a key driver of the stock market any more.

I think the current market lull is mostly a technical phenomenon. But today’s figures certainly make it easier for the Fed to begin the upward march of interest rates from the current emergency lows toward normal at mid-year rather than later.  That idea probably also has some sort-term traders on edge.

the US Employment Situation, January 2015

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

the best laid plans…

I’d intended to write about the oil industry today, no matter what the results of the monthly Bureau of Labor Statistics monthly Employment Situation report released this morning.  How good/bad could it be?, I thought.  If anything, there might be a negative impact from layoffs in the oilfields.

Turns out, the January 2105 ES is really good, so I’m writing about that instead.  Different varieties of oil stocks on Monday.

large job gains

The economy added 257, 000 jobs in January, +267,000 in the private sector and -10,000 in government.  That’s significantly more than economists had been forecasting, although I’ve come to think that forecasters don’t tend to put their best efforts into coming up with these numbers.  It’s also the latest in a long string of  monthly gains that are way above the +125,000 or so needed to absorb new workers leaving school and entering the workforce for the first time.

very large positive revisions

More important, the revisions to prior months’ job gain estimates are positive   …and enormous.

November 2014 new positions were originally reported as +321,000.  That figure was revised up to +353,000 last month.  The just-released final figure is +423,000.

December 2014 new positions were reported as +252,000.  That has been revised up this month to +329,000.

Add revisions to the January new job total and the economy turns out to be employing a whopping 404,000 more people than we thought a month ago.

unemployment rate up

The unemployment rate rose slightly in January to 5.7%, despite the jobs gains.  That’s because the labor force grew by over a million workers during the month.  This is also good news.  It implies that large numbers of unemployed people who had stopped looking for work–and thus dropped out of the workforce–now think there’s a good chance they can find a position and are back job hunting again.  The return of discouraged workers is another positive sign that had been missing up until now in the rebound from recession.

salary news still mixed

Wages grew by 2.2% over the past year.  December had shown a drop of $.05 an hour in average wages; January recovered that and added another $.07 to $24.75.

So far S&P 500 stock index futures have gained about six points in the pre-market–a tepid, but positive, response.  I think this news deserves better.

the December 2014 Employment Situation

January 9, 2015 By in Current Market Thoughts, economics, employment, Employment Situation report, wage gains Tags: , , , , , , , Leave a comment

The Bureau of Labor Statistics, part of the Labor Department, published its monthly Employment Situation for December at 8:30am est.

The report continued the recent string of exceptionally strong results.  The economy added 252,000 new positions (240,000 in the private sector) during December, or +12,000 better than consensus estimates of a 240,000 jobs gain.

Revisions to the two prior months’ data were unusually good, as well.  In its initial update to November data, the BLS now says the US gained 353,000 new jobs that month, +32,000 more than initially thought–even though the initial November figures were a huge positive surprise.  The agency now puts October job gains at +261,000–a boost of another +18,000 positions over its November estimate.

The unemployment rate fell from 5.8% to 5.6%; the number of unemployed fell by 383,000.

 

No sign of wage increases yet.  Average hourly earnings (now $24.57 for private non-farm workers) are up by 1.7% year-on-year.  Hourly wages fell by a nickel in December, after rising by 6¢ in November.

No sign of net layoffs in energy-related industries, although it may be too soon for this to be happening.  Still, there are no signs that validate the (odd, to my mind) conclusions of statistically-driven economic researcher that a declining oil price is a harbinger of recession.

 

 

 

the November 2014 Employment Situation

December 5, 2014 By in economics, employment, Employment Situation report, JOLTS report, wage gains Tags: , , , , , , , Leave a comment

the Employment Situation

The Bureau of Labor Statistics of the Labor Department released its monthly Employment Situation report at 8:30 this morning.  I had intended to igrnore the report and continue laying out my Strategy for stocks next year.  But the news is surprisingly good–despite the apparent indifference in futures markets as I’m writing this.

lots of new jobs

The economy added 321.000 new jobs in November, all but 7,000 of them in the private sector.  That’s way above the average jobs gain over the past year, as well as miles ahead of economists’ forecasts (which may say as much about the forecasts as about the economic reality).  In addition, revisions to the two prior months reported were also positive, totalling an extra 44,000 positions.  Final job gains for September stand at +271,000; the current October estimate is +243,000.

To put the figures in perspective, the economy needs to create 125,000 – 150,000 new jobs each month to absorb first-time job seekers leaving school.  Anything over that eats into long-term unemployment.  Over the past three months, then, close to half a million people have shifted from being unemployed to having work.

unemployment

The unemployment rate remained at 5.8% despite the large job gains.  This is mostly, I think, because the workforce expanded by about a half million as better job prospects caused people who had given up the search for work starting to look again. That’s what usually happens.  At least some part, however, is due to the fact that job gains/losses and the unemployment rate are determined using two different surveys–and two different sets of data.

JOLTS

The latest JOLTS (Job Openings and Labor Turnover Survey) report, about a month ago, from the BLS offers similar encouragement.  There are now 4.7 million unfilled jobs in the economy.   More important, the quits rate–that is, the number of people voluntarily leaving their jobs, presumably for better employment elsewhere–is rising.  This is a sign that present jobholders have increasing confidence in their skills and employability.

economic ointment fly:  wage growth

The only fly in the employment ointment is that wages are still only rising at a 2% annual rate, or basically no growth in real (inflation-adjusted) terms.

From a stock market perspective, it’s hard to know if this is good or bad.  Higher wages would presumably mean more consumer spending and therefore accelerating earnings growth for publicly traded companies.  That’s a plus.  On the other hand, accelerating wage growth can be an early indicator of inflation to come–and might cause the Fed to speed up the pace at which it will be raising interest rates in 2015.  That would surely make the ride for stocks bumpier, and would most likely cause prices to decline.

My bottom line:  despite Wall Street’s current indifference, this report is surprisingly good news.

Back to strategy on Monday.

the Employment Situation–now scanning the horizon for wage increases

October 6, 2014 By in employment, Employment Situation report Tags: , , , , , , , , Leave a comment

the Employment Situation

Last Friday morning the Bureau of Labor Statistics of the Labor Department released its monthly Employment Situation report for September.  The numbers were good– +248,000 new jobs added in the economy, +236,000 of them in the private sector.

Revisions were also favorable.  July figures were boosted from +212,000 to +243,000, and the worrisome +142,000 number posted for August was revised up to +180,000.

With last month’s poor employment gain showing now being interpreted as simply a hiccup in the reporting system rather than an indicator of a slowdown in hiring, the stock market’s attention is beginning to turn toward the wage gain information in the ES, rather than the employment numbers themselves.

wage gains?

what counts aw wages in the ES?

The figure itself appears to me to be pretty solid.  It’s derived from actual gross wage figures reported by the large number of substantial private sector firms who are participants in the BLS Establishment survey.  There is some government estimation, in the sense that the participating firms are thought to be representative of the economy as a whole.  But the data aren’t estimations.  They’re the real, complete salary figures.

The figures are gross, in the sense that they are before any deduction for taxes or benefits.

They’re salary figures only.  They don’t include payroll taxes that employers pay.  They also don;t include health or retirement benefits that employees may receive.

the current rate of wage gains…

…is 2% per year.

In one sense, this suits the Fed just fine.  The absence of sharp upward pressure on wages means the central bank doesn’t have to hurry to raise interest rates to stave off potentially runaway inflation (in the US, inflation is almost completely about wage gains).  The low number implies that employers can easily find all the qualified workers they need to grow their businesses either from new entrants into the labor market or from the currently unemployed.  They don’t need to poach new hires from rivals by offering very large pay increases.

On the other, it’s kind of eerie that the Fed can have had the monetary stimulus taps more wide open than ever before for over five years and not have wages be rising faster than this.

The wage gain numbers will increase in importance to Wall Street in the coming months, I think, as the Fed prepares to start raising the Federal Funds rate from the current level of zero.

My sense of the consensus belief is that:

–rates will being to rise next Spring,

–the “normal” rate is not the 4.0%-4.5% the Fed was talking about in 2012-13, but rather 2.5%-3.0%, and

–the Fed Funds rate could be halfway back to normal by the end of 2015–meaning five or six quarter-percent moves next year.