Employment Situation

This came out three and a half hours ago, so this is probably not news to any of you at this point.

 

Anyway, this is the Employment Situation report from the US Bureau of Labor Statistics.  This is considered the definitive look at employment levels and the unemployment rate in this country.  The Challenger Report,, the Monster Index, ADP, all of these are pale shadows of this ultimate report.

 

In February, a seasonally-adjusted 192,000 jobs were added to nonfarm payroll lists.  The official unemployment rate was 8.9%, average hourly earnings were unchanged, and the average workweek was 34.2 hours.

 

For March, the Econoday-surveyed analysts called for the following:  200,000 new nonfarm jobs (seasonally adjusted), no change in the unemployment rate, a 0.2% increase in average hourly earnings, and an increase in the average workweek to 34.3 hours.

 

We turn now to the BLS for the official summary of the results for March.  Nonfarm payroll employment increased by 216,000 (beating expectations) and the unemployment rate fell slightly to 8.8% (also beating expectations).  The average workweek hit 34.3 hours, and average hourly earnings remained unchanged.

 

Now, that 8.8% unemployment rate represents 13.5 million people out of work.  6.1 million of those persons are long-term unemployed (meaning they have been jobless for 27 weeks or more).  The long-term unemployed now represent 45.5% of the total number of people unemployed (up from last month's 43.9%).

 

There are two categories of people who are not counted as unemployed, but whom a number of economists believe should be counted:  involuntary part-time workers (people who would take permanent full-time jobs if they could find them), and individuals marginally attached to the labor force (people who are not working, who want jobs, and who are available for work, but who have not searched for work in the last 4 weeks).  There are 8.4 million involuntary part-time workers , and 2.4 million marginally attached individuals.  Including them, the effective unemployment rate is more like 14.4%.

Factory Orders

More formally, this is the Full Report on Manufacturers' Shipments, Inventories, and Orders.  It's information collected and released by the US Census Bureau's Department of Commerce, and it tracks the rate of change in new orders for manufactured goods, manufacturer inventories, and manufactured goods shipped from the factory.  Analysts and investors love this report, because increasing factory orders represent increasing economic growth.

 

In January, factory orders were up 3.1%.  The Econoday-surveyed analysts aren't as optimistic about February, and are anticipating only a 0.5% increase in new orders.  With that in mind, let us turn to the February 2011 report to find out how things worked out.

 

New orders for manufactured goods declined 0.1%, substantially missing expectations.  Shipments increased for the sixth consecutive month, however, up 0.3% for February.  Unfilled orders increased 0.5%, and inventories increased 0.8%.

Chicago PMI

The Chicago Purchasing Managers Index report is a report from the Chicago Institute for Supply Management that examines business conditions in the Windy City.  It's a report of modest importance, but investors and analysts like it as a strong regional indicator of general business activity.  It is also typically viewed as being representative of the overall economic health of the nation.

 

The core component of the Chicago PMI report is the Business Barometer Index.  In February, it came in at a seasonally adjusted 71.2, and the Econoday-surveyed analysts are expecting it to cool off a little.  They're looking for a level of 70.0.  The March report shows that the index did decline, coming in at a seasonally-adjusted level of 70.6 (which still beats expectations).

World News

Japan

• In the first post-earthquake visit by a foreign leader to Japan, French President Nicolas Sarkozy has called for the creation of new and legally binding global nuclear regulations.  Japanese Prime Minister Naoto Kan is backing the proposal.

The Ivory Coast

• Forces loyal to Alassane Ouattara have seized San Pedro, a major cocoa port, as part of an ongoing rebellion aimed at ousting President Laurent Gbagbo (who refused to step down after he lost the presidential election last November).  Cocoa bean exports, which have been disrupted since the rebellion began, may resume within days.

 

Libya

• Libyan rebels rallied for a counterattack today, on news that President Obama has authorized the CIA to begin covert operations in Libya and that Moussa Koussa has defected.
• US Defense Secretary Robert Gates told Congress earlier today that he expects to see Muammar Gaddafi removed from power by his own people, but that removing Gaddafi from power is not part of the UN Security Council mandate.

 

Portugal

• Revised figures released yesterday show that Portugal's deficit is currently at 8.6% of GDP, which is 100 bps higher than it should be under its austerity measures.

 

United States

• US Treasury Secretary Timothy Geithner has told a G20 meeting that tightly controlled exchange rates are the main flaw in the international monetary system[1].  He also called for a stronger International Monetary Fund.
• Ohio's legislature voted yesterday to strip collective bargaining rights from about 350,000 state employees.

 

[1]  Apparently, the fact that 26 nations have a debt to GDP ratio higher than Spain (the most stable of the PIIGS nations as of 2010), is not the main flaw.

Gross Assails US Debt as Greek-Like

If you actually click on the link to read Bill Gross' article, it's even more scathing than this summary makes it sound.

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View this article on our website: Gross Assails U.S. Debt as Greek-Like

Gross Assails U.S. Debt as Greek-Like

Article published on March 31, 2011
By Joe Morris

Pimco's Bill Gross has ratcheted up his criticism of federal budget policy, implying he will not favor Treasurys until Congress tackles entitlement spending.

In his monthly investment commentary posted to Pimco's website, Gross calculates the country's unrecorded debt burden at close to 500% of gross domestic product, warning "we are out-Greeking the Greeks."

The comments shed light on Gross's decision, revealed earlier this month, to dump Total Return's entire holdings in U.S. government–related debt, including Treasury debt. A disclosure on the firm's website reveals that as of Feb. 28 the $236.93 billion fund's government-related debt portion was zero, compared with 12% a month earlier. No update has since been posted.

Gross does not reference the Total Return move specifically in his latest commentary but does muster an argument against holding Treasurys. Without congressional cutbacks to Medicare, Medicaid and Social Security, he contends, the country will effectively default through rising inflation, currency devaluation and low to negative real interest rates.

Pimco "has been selling Treasuries because they have little value within the context of a $75 trillion total debt burden," he writes. "Our clients... do not want to be shortchanged or have their pockets picked."

 

Jobless Claims

Continuing the countdown to tomorrow's Employment Situation report, we turn now to First Time Jobless Claims.

 

If you recall last week's data, the advance figure for seasonally adjusted initial claims for the week ending 3/19 was 382,000 (which beat expectations by 3000), with the unadjusted advance number at 351,204.  The seasonally adjusted state program insured unemployment level was 3,721,000, and the unadjusted level was 4,260,519.  Finally, as of 3/5, the total number of people claiming benefits in all programs was 8,766,062.

 

This week, the Econoday-surveyed analysts are expecting to see the number of first time claims decrease, falling to a level of 380,000.

 

We turn now to the US Department of Labor for the Weekly Claims Report for the week ending 3/26.  First off, they have revised the number of seasonally adjusted initial claims for the week ending 3/19 upwards to 394,000, an inauspicious start.  Then, they report the advance figure for seasonally adjusted initial claims for 3/26 at 388,000.  The good news is that this is a decline from last week's revised figure;  the bad news is that this is 6000 higher than last week's advance number (which is the number everyone gets excited about), and it has missed expectations by 8000.

 

The unadjusted advance number came in at 354,301.  The seasonally adjusted state program insured unemployment level was revised upwards for the week ending 3/19 to a level of 3,765,000, and the advance number for the week ending 3/26 came in at 3,714,000.  That is still an improvement from last week's initial numbers, but it's not as dramatic as the DoL is claiming based on the revised numbers.

 

As of 3/12, the total number of people claiming benefits in all programs was 8,770,443.

Monster Employment Index

What is the Monster Employment Index? It is, according to the index's web site, "a broad and comprehensive monthly analysis of US online job demand conducted by Monster Worldwide, Inc. Based on a real-time review of employer job opportunities culled from a large, representative selection of corporate career sites and job boards, including Monster, the Monster employment Index presents a snapshot of employer online recruitment activity nationwide."

In other words, it is an index created by Monster.com to track private sector hiring. This particular index is not considered as significant as the ADP Employment Report - it actually falls in with the Challenger Jobs Report in terms of importance - mostly because it doesn't track either employment or unemployment. It only tracks job openings, and then only those posted online. So its focus is a little tight.

Last month, the index hit a level of 129 (October 2003 is 100). Looking at the March report, we see that the index climbed 7 points to a level of 136 in March (an increase of 5%), with the annual growth rate in hiring increasing to 9%.