Productivity And Costs And First Time Jobless Claims

This is looking to be a morning full of economic measures. Coming out at 8:30 AM EST we have the big boys on the Street, First Time Jobless Claims and Productivity and Costs. Then, at 10 AM EST, we have the ISM Non-Manufacturing Index and Factory Orders.

As far as First-Time Jobless Claims are concerned, we had a miserable week last week. Initial jobless claims hit a seasonally adjusted 454,000 for the week ending 1/22. For the week ending 1/29, there does seem to be a little optimism (possibly driven, in part at least, by yesterday's pretty good jobs reports from ADP and Challenger), and we're looking at a consensus expectation of 425,000.

So, was the optimism of the analysts justified? According to the US Department of Labor, their only failing was that they were not optimistic enough. On the down side, the initial jobless claims figures were revised upwards to 457,000 (not so good). But then, the seasonally adjusted initial claims for the week ending 1/29 came in at 415,000 - beating expectations by 10,000. Meanwhile, the seasonally adjusted insured unemployment level fell to 3,925,000 - a nice decline from the previous week's revised level of 4,009,000.

The unadjusted figures are 459,683 new jobless claims (still down 26,633 from last week) and an insured unemployment level that increased 5,274 to a level of 4,619,319. 25 states saw first-time claims fall by more than 1000, and only 4 states saw claims increase by more than 1000.

In a word: not bad[1]. The markets should be happy about this.

Then, looking at Productivity and Costs, Q3 2010 saw a 2.3% increase in nonfarm productivity, and a 0.1% decrease in unit labor costs. For Q4 2010 the analysts are expecting the exact same thing - a 2.3% increase in nonfarm productivity and a 0.1% decrease in unit labor costs.

Much as was the case with First-Time Jobless Claims, the Bureau of Labor Statistics is telling us that the analysts weren't optimistic enough. Nonfarm labor productivity increased 2.6% in Q4 2010, driven by a 4.5% increase in output and a 1.8% increase in hours worked. meanwhile, unit labor costs decreased by 0.6%, driven by the fact that the increase in productivity (up 2.6% as we just saw) outpaced the increase in average hourly compensation over the same time (up 1.9%).

So we're off to a good start. Now, if the Middle East can keep from descending into anarchy and bloodshed, maybe the markets will be up today.

[1] Yeah, I know. "Not bad" is two words. Here's another word: "so what'?

Commissioner's Statement on the Employment Situation News Release

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The latest Commissioner's Statement on the Employment Situation (http://www.bls.gov/news.release/pdf/jec.pdf) was issued today by the Bureau of Labor Statistics. The text is below.
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Advance copies of this statement are made available to the press under lock-up conditions with the explicit understanding that the data are embargoed until 8:30 a.m. Eastern Standard Time.

Statement of

Keith Hall
Commissioner
Bureau of Labor Statistics

Friday, January 7, 2011

In December, the unemployment rate fell by 0.4 percentage point to 9.4 percent, and nonfarm payroll employment increased by 103,000. From a recent low point in December 2009, payroll employment has risen by 1.1 million, or an average of 94,000 per month. In December, employment increased in leisure and hospitality and in health care but was little changed in other major industries.

The leisure and hospitality sector added 47,000 jobs over the month, with continued gains in food services. Employment also rose in amusements, gambling, and recreation. Since a recent low point in leisure and hospitality employment in December 2009, the industry has added nearly a quarter of a million jobs.

Health care employment expanded by 36,000 in December and by 266,000 in all of 2010. Over the month, employment continued to rise in several health-related services, including outpatient care centers, hospitals, and nursing and residential care facilities. Employment in temporary help services also continued to trend up in December and has increased by 495,000 since a recent low in September 2009.

Over the month, job growth continued in support activities for mining operations; the industry has added 77,000 jobs since a recent low in October 2009.

Construction employment changed little in December and, on net, has been essentially flat since March. In contrast, job losses from August 2006 through February 2010 totaled 2.1 million. In December, retail trade employment was little changed, although job gains in the industry totaled 116,000 for all of 2010. Over the month, motor vehicle and parts dealers added 8,000 jobs, in line with the trend since July. December's employment gain among motor vehicle and parts dealers was offset by a loss of 8,000 in health and personal care stores.

Manufacturing employment was little changed over the month. Following modest job growth earlier in 2010, manufacturing employment has been relatively flat, on net, since May. The factory workweek for all employees was down 0.1 hour in December but was 1.5 hours above the low point of 38.7 hours in June 2009.

Average hourly earnings of all employees on private nonfarm payrolls rose by 3 cents in December to $22.78. Over the past 12 months, average hourly earnings have risen by 1.8 percent. From November 2009 to November 2010, the Consumer Price Index for All Urban Consumers (CPI-U) increased by 1.1 percent.

Turning to measures from our survey of households, the jobless rate declined by 0.4 percentage point in December to 9.4 percent. A year earlier, the unemployment rate was 9.9 percent. The number of unemployed persons also declined over the month, from 15.0 million to 14.5 million, largely reflecting a decrease in the number of unemployed adult men. Among the unemployed, 44.3 percent had been jobless for 27 weeks or more in December, up from 40.1 percent a year earlier.

The labor force participation rate edged down in December to 64.3 percent and was slightly lower than a year earlier (64.7 percent). The number of persons working part time who would have preferred full-time employment was essentially unchanged in December at 8.9 million. The number of discouraged workers grew over the year by 389,000 to 1.3 million in December (not seasonally adjusted). Discouraged workers are persons outside the labor force who are not looking for work because they believe their job search efforts would be unsuccessful.

Data users are reminded that seasonal adjustment factors for the household survey are updated each year with the release of the December data. Seasonally adjusted estimates going back 5 years--to January 2006--were subject to revision.

Summarizing labor market developments for December, the jobless rate fell to 9.4 percent, and nonfarm payroll employment rose by 103,000.

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U.S. Import and Export Price Indexes News Release

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The latest U. S. Import and Export Price Indexes news release (http://www.bls.gov/news.release/pdf/ximpim.pdf) was issued today by the Bureau of Labor Statistics. Highlights are below.
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U.S. import prices increased 1.3 percent in November, following a 1.0 percent advance the previous month. Rising prices for fuel and nonfuel imports contributed to both the November and October increases. Prices for U.S. exports also rose in November, increasing 1.5 percent after advancing 0.8 percent in October.

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Employment Situation: The 800 lb Gorilla Of Metrics

It's that time of the month. The time of the month when the Bureau of Labor Statistics collates data points and puts out a report that makes the markets sweat blood.

Yes, sir, it's time for the Employment Situation.

Let's start off with a recap of October: nonfarm payrolls were up a total of 151,000, with private payrolls up 159,000. The unemployment rate was 9.6%, and average hourly earnings increased by 0.2%.

For November, the Street is feeling optimistic. They're expecting to see an additional 168,000 nonfarm jobs created, and they're expecting to see average hourly earnings increase an additional 0.2%. They are also, however, expecting to see the unemployment rate rise to 9.7%.

Now, how did we do? To start with, go ahead and pull up the Employment Situation at http://www.bls.gov/news.release/empsit.nr0.htm. Go ahead. I'll wait.

Now, let's start with the dry facts. Nonfarm payroll employment was up only 39,000 in November - far less than the 168,000 consensus projection (far less than the low end of the consensus range for that matter, which still called for a 100k increase). The breakout is as follows:
* Temporary Help Services jobs increased by 40,000
* Health Care jobs increased by 19,000 (8,000 of which were in hospitals)
* Mining jobs increased by 6000.
* Retail Trade employment fell 28,000 (9000 in department stores, 6000 in home furnishing stores)
* Manufacturing Jobs fell 13,000.

The unemployment rate hit 9.8%, with 15.1 million unemployed - a figure that includes the 390,000 people who lost their jobs in November, the 9.1 million people who are "short term" unemployed [1], and the 6.3 million who are "long-term" unemployed [2].

This unemployment figure does not count in three categories of people: individuals not looking for employment, individuals "marginally attached to the labor force" [3], and individuals "employed part time for economic reasons" (aka "involuntary part-time workers' or "the underemployed"). There are obviously no figures on people who are not looking for and are not interested in obtaining work. There are 2.5 million people who are "marginally attached to the labor force" (1.3 million of whom no longer believe they will be able to find a job), and 9.0 million "involuntary part-time workers". In other words, the unemployment rate would be 11.39% if we actually counted the "marginally attached to the labor force" unemployed, and goes up to 17.23% if you also include the "involuntary part-time workers" (which is not unreasonable if you think about it).

Average hourly earnings for the people who are still employed increased by $0.01 to $22.75. In percentage terms, that is not quite unchanged - it was up 0.04%.

So, the results? Grim. No matter how you slice it, the employment situation is bad.

[1] Unemployed for less than 27 weeks.
[2] Unemployed for 27+ weeks.
[3] The difference between people not looking for work and people marginally attached is this: the second category want a job, can't find one, and haven't looked for at least 4 weeks because they've run out of hope. Source: "Who is counted as unemployed?" from http://www.bls.gov/cps/cps_htgm.htm#unemployed.