Employment Situation Summary for Friday, January 07, 2011

Employment Situation Summary
Release Date: Usually the first Friday of each month
Release Site: http://www.bls.gov/

Market Relevance: VERY HIGH
Management Value: VERY HIGH

To learn about the official release please follow:
http://www.blueworldassetmanagers.com/explanation.html

Friday, January 07, 2011

Blue World Employment Situation Analysis

The Bureau of Labor Statistics released a jobs report today that was, per usual of late, not surprising. I've seen the word "disappointing" used a lot this morning. The "confusion" most experts are suffering is due to the conflicting indicators week by week with new jobless claims and the monthly ADP report. Since the beginning of time investors, managers and experts have tried to discover a way to accurately and consistently predict the unemployment report. The problem is that no other indicator, government or private, samples as large a pool or evaluates from the two key perspectives simultaneously, meaning household and establishment data. (follow link for explanation http://www.blueworldassetmanagers.com/explanation.html)


We are in uncharted waters, here. This recession is not like prior recessions caused by a normal business cycle downturn, international conflict or some other type of business or confidence disruption that, while significant, had a probable game clock. This recession started with a perceived slow down. It was exacerbated when it appeared a solid anti-business candidate would win the Presidency and have the full support of an anti-business congress. An acceleration occurred when he did win and it continued to deepen as his policies were implemented. At this time our future is still rife with uncertainty regarding healthcare legislation, tax policy and the business climate, in general. Remember, the government CANNOT create jobs no matter how hard they focus on them. All they can do is create a business friendly climate that encourages the private sector to expand or, as is the case now, create a climate of fear and uncertainty, the guaranteed killers of growth . A payroll tax break for...the employees?!? Window dressing. Extending the Bush era tax cuts for only 24 months, healthcare costs to employers already shooting through the roof, the continued threat of crippling regulation of construction, energy and manufacturing by legislation or fiat does nothing to encourage those who invest real money, hire real people and make real contributions to GDP. It really is that simple.

Based on all that you would not be surprised to learn that Blue World expects to see inconsistent and very muted growth in employment, GDP and demand for at least and, hopefully only, the next two years UNLESS we see a very high profile and significant shift in political attitude and policy.

Now, to our analysis of the numbers. The overall rate dropped to 9.4 percent which continues to be a staggering and unacceptable number. The details reveal that no meaningful changes, good or bad, have occurred and the markets are reacting accordingly today as the detail is digested. The unemployed rate for professionals is still flirting with 5 percent (4.8%). Historically 3.5% for this group was considered devastating. There were increases in each of the following negative categories: unemployed for more than 27 weeks, could only find part-time work, marginally attached and discouraged workers and construction job losses. Predictably there were continued gains in healthcare and social assistance. The diffusion index continues its erratic movement. As the inventory component of GDP would predict manufacturing hours worked and overtime per week was flat.

There is no magic here, folks. People who operate on theory can afford to see things in a light substantially different than those who invest real money, hire real people and make real contributions to GDP.

Please look for some upcoming posts with more detail on some of the commentary above.

We remain in a very defensive posture with our investment strategies and will for the foreseeable future.

We always thank you for reading and...stay tuned!

Release Site: http://www.bls.gov/

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 are not giving advice and does not warrant or guarantee predictions based on its analysis.

Nov. 2010 Employment Report Analysis

Employment Situation Summary
Release Date: Usually the first Friday of each month
Release Site: http://www.bls.gov/
Market Relevance: VERY HIGH
Management Value: VERY HIGH

To learn about the official release please follow:
http://www.blueworldassetmanagers.com/explanation.html

"Brain surgery is not rocket science to a brain surgeon".

Friday, December 3, 2010

Blue World Employment Situation Analysis
Occasionally I feel the need to give our economic report analysis posts a nickname. A recent example was "Reality vs. Rhetoric". The only one I can think of for this one is:

THANK GOD WE, AT BLUE WORLD, ARE NOT EXPERTS!

All I've been reading all week are articles talking about how employment may have strengthened in November. Really? Based on what? A few more shoppers than last year? That is ridiculous. I really don't know where the experts think these jobs are coming from but there is not a single indicator to suggest a material improvement in the employment situation has or will occur anytime soon. GDP growth includes too much inventory, has been revised sharply lower for the next year and prospects based on foreign trade have dimmed. Housing, bad. Construction, bad. Manufacturing, bad. (See "Is the Table Set for the Double Dip"? http://blueworldassetblog.blogspot.com/) Friday the TV, radio and internet were peppered with adjectives like "surprised", "shocked", "appalled", "stunned", "dazed", "shaken", "dismayed"," horrified", "aghast", etc. These adjectives were being used to describe the reactions of the "experts" to the employment numbers. Well, let's all take a moment to THANK GOD WE, AT BLUE WORLD, ARE NOT EXPERTS!

So, perhaps a little less expert-bashing and a little more uninformed, uneducated, novice analysis would be of greater value.

The Household Survey (Table A) reports an unemployed rate of 9.8 percent, up two tenths of a percent from October '10. More importantly the total private sector only added 50,000 jobs and of those only 39,000 were non-farm positions according the Establishment Data on Table B. Section U-6 of Table A-15, Total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force, remains at a staggering 17 percent. If you have read us at all you will know that the most disconcerting number in this report is the 5.1 percent unemployed rate for those at least 25 years old with a bachelor's degree, or higher. That is a jump from October '10 of .4%. That is a BIG scary number. Manufacturing and construction lost jobs while the number of unemployed for over 27 weeks continues to climb.

We see not a single surprise in any of these numbers. Jobs, simply, are not created based on nothing. The only reason payrolls grow is in response to an increasing demand for products and services in the private sector. Jobs and demand do not operate in parallel. They operate in circuit. Right now that circuit is in "vicious cycle" mode. Unemployment is high, so many Americans have no disposable income. No disposable income translates to decreasing demand for even the most basic necessities. Decreasing demand leads to decreasing need for labor. It should therefore be no surprise that healthcare is among the few industries adding jobs consistently throughout this recession. The baby boomers are aging and requiring more and more care. Increased demand equals increased employment. It is no mystery.

Employers need a reason to believe that demand will increase. They need to feel the political and regulatory environment is stable and supportive of business activity. Until that happens anyone who predicts an improvement in the employment situation and, therefore, the economy must be...an expert.

We remain in a very defensive posture with our investment strategies and will for the foreseeable future.

Thank you for reading and...stay tuned!

Release Site: http://www.bls.gov/

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 are not giving advice and does not warrant or guarantee predictions based on its analysis.

Employment Situation Analysis 10-08-10

Employment Situation Summary
Release Date: Usually the first Friday of each month
Release Site: www.bls.gov
Market Sensitivity: VERY HIGH
Management Value: VERY HIGH

Friday, October 07, 2010

While the unemployment rate has not changed the situation has deteriorated.
The net job loss was -95,000 with the private sector adding 64,000 jobs while the government shed 159,000 as more temporary census jobs are ending. Construction and manufacturing both posted losses. The 25yoa+ bachelor’s degree and higher crowd is still unemployed at staggering rates (4.4% for September). Average weekly hours worked in manufacturing and construction fell and the number of voluntary job leavers fell substantially (Table A-11. Unemployed persons by reason for unemployment)

The attention getter in this report lives in Table U-6 (Total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force). These are the under employed plus the gave-ups. The rate trend for this group from June through September is 16.5, 16.5, 16.7 and now 17.1%.

It appears that there were additional layoffs in the second half of September that would not be reflected in this release but caught by the recent Gallup survey http://www.gallup.com/tag/Unemployment.aspx. That suggests we need to hold on tight next month. We’ll see.

The recession continues by all valid and objective data. We do not see any evidence of a change in policy that would improve the trend. We believe hiring will remain stagnant with accelerating job losses for October 2010. The uncertainty of the mid-term elections is, undoubtedly, a contributor to the business community’s reluctance to reach into the coffers and hire for expansion because rising unemployment means declining demand in spite of “stimulus”. Perhaps some clarity of direction will be a stabilizing influence after the elections.

Thank you for reading and stay tuned.

Employment Situation Summary 9-3-10

Employment Situation Summary
Release Date: Usually the first Friday of each month
Release Site: www.bls.gov
Market Sensitivity: VERY HIGH
Management Value: VERY HIGH

Friday, September 03, 2010

We write these analysis reports to offer real investors and business leaders actionable intelligence well beyond the spin we get from media headlines, economy experts and market gurus. If we are in the business of combating absurdity, business is good!

The employment report, again, requires little analysis as the picture has not improved. That was predictable based on the balance of data and general mood of consumers and employers. The "experts" were surprised, as usual. This time it wasn't as bad as they thought it would be. So, a rise to 9.6% is reason for optimism this month. WOW.

We continue to be amused/baffled by the media reports. When the rate goes up that is, somehow, good news and when the rate goes down it is an ominous sign. Let's get to some actual numbers that mean something.

In a service based economy the percentage of unemployed workers with a minimum four year college degree is a bellwether indicator of the trend, health and sustainability of the economy at large. These are the people most likely to spend on durable goods, homes and big ticket luxury items, so it is one of our go-to stats when evaluating the state of the job market and economy as a whole. This group continues to be out of work at rates never seen since the stat has been tracked and the rate has risen .1% per month since May to the current level of 4.6%. That's bad.

The total for un/under/discouraged/gave up (Table A-15, U-6) is up .2% this month over last to 16.7%.

Total private, non-farm (Table B) added 67,000 paychecks. That is less than a third of what we need to break even on new entrants at this point.

The number of part-timers for economic reasons, i.e. slack work or could only find part time work, is up substantially.

Ultimately, there is no improvement in the job market which is a clear indicator of the direction of the economy and prognosticates poor fortunes for US business.

Use those stops in the market, puts are better if you know how. Make sure your private equity plays are diligenced by a crack team. Build in as many safety nets as you can. Triple verify real estate cash flows if you can't afford to carry a property out-of-pocket. There are plenty of opportunities but the defense has to be ready to play!


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

Employment Situation Summary Analysis

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

To learn about the official release please follow:
http://www.blueworldassetmanagers.com/explanation.html

Friday, June 4, 2010

Blue World Employment Situation Analysis

Remember when I sent out a tweet that said don't listen to "experts" in the media when making important financial decisions because most headlines start with language along the lines of "analysts were surprised when..." What I meant to say is "listen to us." Some very big names were predicting anywhere from 450,000 to 600,000 new jobs for May. As an organization that saw virtually no potential for good job growth in the private sector we wondered "could we be that wrong? Unfortunately, NOPE. The unemployment rate fell to 9.7% but, so far, even the media does not seem to be trying to spin this as a good thing. Ironic, isn't it? The rate jumps in April and that was a "good thing." The rate falls in May and that is a "bad thing." Go figure.

As usual, the real truth is in the in the detail behind the headlines so let's take a look...

The overall rate fell .2% from 9.9% to 9.7%. Workers 25+ with a bachelor's degree or higher continue to be unemployed at historically unprecedented rates near 5% (4.7% in May). The rates for those without and with only a high school diploma also rose in spite of the summer-help hiring season getting started. That's not a good sign. The number of people reentering and first time entries to the job market also fell.

As we move to Table B (Establishment Survey) we can readily see the meaningful data. The economy added 431,000 paychecks. Ordinarily we'd say that's a good thing. The problem, however, is that of those 431,000 only 41,000 came from the private sector. The balance of 390,000 came from government hires. Worse, yet, is that the vast majority of those are temporary census jobs. One can argue that a job is a job but remember, the government's ability to be an employer is based completely in its ability to collect revenues from the private sector. If the private sector is not growing (GDP and employment says it's not) then it is only a matter of time before the government has to start laying off part-time and full-time workers.

The percentage of workers unemployed for 27+ weeks edged up, again, to 46%. That is over 6.75 million workers. Also troubling is that those unemployed for 5 week or less rose again. These are new job losses and earlier this week some major companies announced mass layoffs to come soon.

Manufacturing weekly hours worked and overtime remain predictably lackluster based on the GDP numbers but hourly manufacturing wages rose enough to notice.

Well, let's beat the same ole' drum. Blue World analysts do not see the catalysts necessary to drive a vigorous recovery. We, instead, perceive several major risk factors for continued and accelerating weakness, especially as we head into the second half of 2010 and Q1-2 of 2011 (Tax Season).

We remain in a very defensive posture with our investment strategies and will for the foreseeable future.

Thank you for reading and...stay tuned!

Release Site: www.bls.gov

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 are not giving advice and does not warrant or guarantee predictions based on its analysis.

Employment Report Analysis 5-7-10

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

To learn about the official release please follow:
http://www.blueworldassetmanagers.com/explanation.html

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: www.bls.gov

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.