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Friday, August 05, 2011

Well, That's A Bad Employment Report

Yeah, yeah, I know the headlines say it's good, but when you look at the underlying detail....

The only thing left to do is to bow respectfully before this Cthulhu of an employment report and ask it if it would like a virgin sacrificed.

Table A (Household). I'm really surprised by this. NFIB last month looked like we should have had a bit of an uptick, but we didn't. Almost always NFIB is predictive.

Total employed dropped from 139,334 to 139,296 (-38K). This is not statistically significant (total employed could have raised somewhat or dropped somewhat) but I was looking for about +110K, so this is something of a punch in the solar plexus. The lowest I expected was about + 45K. Major miss.

The official unemployment rate did drop, but that is because the participation rate dropped from 64.1 to 63.9%. In one bleeping month! Last July it was at 64.6%. The employment-population ratio dropped from 58.2% to 58.1% over the month; over the year it dropped from 58.4 to 58.1%. Over the year the not-in-labor force number rose from 84,262,000 to 86,443,000, that's +2,181,000. Since last July, the official unemployment rate has dropped from 9.5% to 9.1%, but the real unemployment rate has gotten worse.

The numbers of marginally attached workers and discouraged workers grew significantly over the month.

How bad is it, really? I'm just completely crestfallen. Table A-8. On a seasonally-adjusted basis, over the year non-ag workers grew from 136,599 to 136,837. On a non-seasonally adjusted basis, over the year non-ag workers grew from 137,717 to 137,900. That's horrible. Since May, seasonally adjusted non-government wage and salary workers dropped from 108,505 to 108,070. That is quite statistically significant, and the two-month accuracy rises quite a bit. Anyway you look at it, private industry dumped at least 350,000 jobs.

How did I miss so badly on the positive side? I'm not normally a flagrant optimist!

Next week we will get the Monthly Treasury Statement, and then I can look at HI, but it's not going to make me happy. I have to admit the quick check on the end-of-month Monday WIET did not look too good, so I certainly can't claim that this report is just wrong. It is tempting, but that way lies madness.

Another reason why I am so shaken by the pure, unmitigated crappiness of this wretched compilation of unpleasantly true statistics is that auto production did rise significantly in July, which fact is borne out by the drop in part-time for economic reasons (8,552 > 8,396). That was foreshadowed by a freight uptick.

Unfortunately, that was a one-time pop. Auto inventories are building back up and we aren't going to get that boost again in August and September!

Regarding the Establishment Survey - here's Table B-1:
A) You can't rely on this when the economy is shifting rapidly, either in a positive direction or a negative direction.
B) The establishment survey uses the Business Employment Dynamics survey to estimate missed changes in establishments. The latest is the fourth quarter 2010 B.E.D. survey.
C) When employment tax receipts and the household survey are going one way, and the establishment survey is going another, it is a good guess that the establishment survey is the outlier.
D) Another de facto parity check is temporary help services. If employment there is growing significantly, it's usually an indicator of job gains. This month it was flat.

The truly ugly nature of this thing:

We just can't seem to get traction, and although the up-curve is very similar to the outcome of the 2001 recession, there is one important difference - we did not lose very many net jobs in the 2001 recession. It was overall way more like a pause in job growth, and then we were hit with the 9/11 shock just as we were emerging, so the long period of no-net job growth was quite understandable.

Edited to add more Cthulhu detail:

Full time! Jobs. Cthulhu.

No life seen, we are still in the dark, doomed depths.

This is Cthulhu part time:

And what can one say?

When MNC's can import goods from lower cost
countries back into the US without the penalty of
Tariffs why would they bring manufacturing and
The accompanying service jobs back to the US ?
"The sciences, each straining in its own direction, have hitherto harmed us little; but some day the piecing together of dissociated knowledge will open up such terrifying vistas of reality, and of our frightful position therein, that we shall either go mad from the revelation or flee from the deadly light into the peace and safety of a new dark age." - H.P. Lovecraft, The Call of Cthulhu

"You can't rely on this when the economy is shifting rapidly, either in a positive direction or a negative direction."

Fortunately, we can rely on it over the long-term.

Nonfarm Payrolls: 38.6 Million Below Trend

That's give or take a few million of course.

(Feelin' especially snarky today. I apologize. ;))
Mark - Are you attempting to make me find a tall building and jump from it?

I'm not terrified of much, but that graph is damned scary.

There is no cause for concern. This cannot be the Great Depression and I can prove it.

Back then we had AAA credit.

I have a question. Is it the shape of the data in the graph that terrifies you?

Before you answer you might want to peak at this similarly shaped chart that can be found here.

Do you see what reading H.P. Lovecraft can do to a person? I can't help it. Sorry!
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