PREVIEW OF THE JOBS REPORT
Courtesy of The Pragmatic Capitalist
The steady improvement in
The forecast looks for the economy to finally begin a true expansion in 2010 as business gradually starts adding workers, lifting spending on equipment and software, and eventually rebuilding inventories.
Next Friday’s labor market
report is expected to mark a milestone in this transition with the first month of payroll growth since December 2007. To be sure, the December forecast looks for modest job growth of only 40,000 and for the unemployment rate to hold at a lofty 10.0%. But continued declines in initial jobless claims since the week of the December labor market survey and improvement in most employment surveys point to a gradual increase in monthly job gains in coming months.Leading indicators of unemployment suggest that there are two offsetting effects at work. On one side, the drop in continuing jobless claims indicates that unemployment among people out of work less than six months is still probably moving down. On the other side, longer term unemployment has not shown any signs of even leveling off. Also, participation rates have fallen very sharply in recent months, and as the labor market begins to improve there is a risk that job searchers will return to the market, thereby pushing up measured unemployment.
Recent data points to stronger jobs markets. The ISM manufacturing showed an improvement in employment to 52 from last month’s 50.8. ISM non-mfg showed a more dramatic increase this month to 44 from 41.6. Yesterday’s Challenger report showed a similar trend to claims.
Challenger said layoffs fell to 45K from 50,349 in November and compared against 166,348 in December 2008. Continuing jobless claims also show improving trends in joblessness.
Of course, it’s important to keep things in perspective. The recovery on Main Street remains largely non-existent or tepid at best. The severity of the problems we are confronted with are best visualized in the jobs market. Although we might actually produce a gain in jobs this month it is a drop in the bucket compared to the number of jobs lost during this recession. The road to recovery remains a long and difficult one.
From a purely anecdotal perspective I have to say that the job market is certainly improving. For the first time in many months I have been witness to hiring and a definite loosening in corporate purse strings. The capex recovery is certainly spreading to the jobs market. Despite this, the true strength of the economy remains a mystery as government influences provide a false sense of security. We likely won’t get a real sense of the economy until H2 when the government begins to pass the baton to the private sector, but for now, the jobs market appears to be following the “better than expected” theme that has been driving markets for the last 6 months.
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But see this post by Mish: Massive Jump In Emergency Unemployment Compensation (EUC) Benefits – Up 43% In One Month! Is the strength in reported numbers just hiding real weakness, as seen when all types of unemployment are counted inclusively?
From Chris Puplava …
My answer would be a MASSIVE jump in the Emergency Unemployment Compensation (EUC) benefits, which jumped from 3,594,253 (11/07/09) to 5,143,410 (12/19/09), up 43% in just over a month! The increase in EUC more than offset the decline in continuing claims and we are now at a new record when combining all measures of unemployment benefits. Economists were pointing out that continuing claims and initial claims were falling as a bullish sign, however what was happening was that those benefits were exhausting for people who used up that benefit, leading to the decline in the numbers which is proved by a record (52.24%) exhaustion rate.
