Friday, May 7, 2010

Employment Report Analysis 5-7-10

Employment Situation Summary
Release Date: Usually the first Friday of each month
Release Site:
Market Relevance: VERY HIGH
Management Value: VERY HIGH

To learn about the official release please follow:

Friday, May 07, 2010

Blue World Employment Situation Analysis
The media reports of a jump in unemployment to 9.9% is a "good sign" are ridiculous. There appears to be no significant improvement in the employment picture and that should be no surprise. There is no catalyst for robust economic growth. With the anticipation of rising deficits, interest rates and taxes employers will remain cautious. The private sector added 231K to payrolls. That should seem good. The problem is that the underemployed and discouraged (quit looking) also continues to rise hence the rise in the total rate. Don't buy into a "conflicting picture" spin. The total unemployed plus under employed rate is now 17.1%. The unemployed rate for workers 25 and older with a bachelor's degree or higher continues to hover at unprecedented rates near 5% (unchanged from last month at 4.9%). In a service based economy that is an ominous sign. Part timers for economic reasons, whether that's slack work or they want full time but can only find part time, continue to rise. That, also, contributes to the 231K payroll additions as 1 person may have multiple part time jobs. The household survey sees that as one employed person but the establishment survey sees multiple new pay checks. For us, the big news is in the number of weeks unemployed category. Those unemployed for less than 5 weeks is up. Those are new losses. Those unemployed for over 27 weeks is up to 45.9% (6.7 million) of the unemployed. That is staggering. There are 3month up trends in hours worked and some pay categories but they are unimpressive and unconvincing. Overtime hours in manufacturing remain well below what we would like to see.

Overall our opinion has not changed regarding the employment picture and health of the economy. We continue to maintain a very cautious investment stance. Blue World will keep the defense on the field for the foreseeable future as we believe reality eventually has to catch up to the markets.

Release Site:

Every effort is made to ensure accuracy of data transcription but accuracy cannot be guaranteed. The official release site should be cross referenced for accuracy and footnoting. The analysis represents the opinion of Blue World Asset Managers, Ltd. who is not giving advice and does not warrant or guarantee predictions based on its analysis.

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