Tuesday, October 9, 2012

More BLS(BS) and dead fish

Suspicion of the 7.8% unemployment rate is rising not waning.

From Trimtabs:

  • Largest September one month gain in BLS data since 1948!
  • Rarely in September do the number of employed increase.
  • Has happened only six times. Four times it was less than 100k.
  • 775k This time!
  • Since 1955 every September the number of part time workers fell. This time it exploded.

It makes sense that normally at the end of summer part time work decreases as summer vacations end and kids go back to school. So how did we get 775,000 net new jobs at the end of summer???

And from Zerohedge, this stunning analysis:

If employment was surging as reported by the BLS in the last month these numbers should be rising as employers expend capital to boost production.   Furthermore, if business were hiring as strongly as reported then the number of business owners who think that this is a "good time to expand" their businesses should be much higher than 7% which is just 50% of where it stood just prior to the last recession.  
The disconnect between the BLS's employment survey which showed an increase of 574,000 non-farm payrolls in September, 114,000 after revisions, versus the NFIB which showed fewer jobs in September only adds further fuel to the debate.  If the BLS report was correct then the NFIB report should be showing an increase in employment.  However, the survey showed that not only have firms not hired in the last month but only 10% plan to increase employment at their firm in the next three months.  This is down a full 3 points from the last report while 11% plan employment reductions, 2 points higher than last month, as well.  On a seasonally adjusted the net percent of owners planning to create new jobs fell 6 points to 4% which is historically a very weak reading especially during an economic recovery.
Essentially, current levels of hiring are just keeping up with population growth, but not exceeding it.  As discussed recently - a look at full-time employment relative to civilian the population shows that this is indeed the case.  "Unlike the traditional employment metrics used by the BLS which have been adjusted to obfuscate the real employment situation - the level of full-time employment relative to the total population accounts for the movements into, and out of, the workforce. This calculation provides a better barometer of the economic health of the country." 

 However, it is not just the NFIB report that is showing lower levels of job creation that run counter to that of the BLS.  Each month we update the STA Composite Employment Index which is an index of the employment subcomponents of the Chicago Fed National Activity Index, Chicago ISM, several regional Fed manufacturing indexes, ISM surveys and the NFIB report.  As you can clearly see in the chart below not only has the 4-month average of the employment index deteriorated in the last month - it has fallen for six months straight from its peak in March of 26.46 to 18.42 today.  A reading below 20 has normally been indicative of a recessionary economy.


And finally, you may have noticed in the news that layoff notices are have been announced lately, something that despite the weak recovery we haven't heard much of in the last four years. I strongly suspect we have already slipped back into recession and will likely have it confirmed when third quarter GDP is revised....after the election.

  2.  American Airlines said on Tuesday it has notified more than 11,000 workers they could lose their jobs.
  3.  Intel Corp's McAfee security division is planning to lay off a "small percentage" of its workforce of about 7,100 employees.
  4.  The Wall Street Journal reports that Bank of America Corp. (NYSE: BAC), still desperate to turn itself around, will fire 16,000 people this year.
  5.  HP increases the number of coming job cuts to 29,000
  6. FedEx  will lay off "several thousand" as its  business is being hit by the global economic slowdown.
Here's a longer list from businessinsider

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