1. U.S. Economic Data
Michael J. Shafran, National Sales
Adecco
As of August 2012
Reflective of the Bureau of Labor Statistics’ “The Employment Situation – July 2012”
2. Despite the creation of more than 100,000 new jobs, the
national unemployment rate rose in July
JOBS GAINED IN JULY
163,000
UNEMPLOYMENT RATE
8.3%
LOWEST UNEMPLOYMENT
RATE SINCE
February 2009
7. Education remained a job search differentiator
Less than high school 12.7%
High school diploma 8.7%
Some college 7.1%
College educated 4.1%
National average 8.3%
* National unemployment average, according to education levels
Source: BLS
8. A snapshot of metropolitan unemployment figures
Source: BLS
13. Non-farm payrolls vs. the national unemployment rate
(September 2008 – July 2012)
* Source: BLS
Source: WashingtonPost.com
14. Public vs. private sector payrolls
(September 2008 – July 2012)
* Source: BLS
Source: WashingtonPost.com
15. Average hourly wages (September 2008 – July 2012)
* Source: BLS
Source: WashingtonPost.com
16. In Summary
The national unemployment rate rose slightly last month, increasing
from 8.2 percent in June to 8.3 percent in July. However, hiring
augmented considerably, as 99,000 more new jobs were added to the
national economy in July than in June.
Opportunities
• Employment within the
professional and
business services
sector upturned once
again last month, as
hiring rose by 49,000 in
July, in comparison to a
gain of 47,000 jobs in
June.
• Hiring also rose within
the nation’s healthcare,
manufacturing, and
leisure and hospitality
industries, by 12,000,
25,000, and 27,000,
respectively.
Weaknesses
Source: ABCNews.Go.com July Unemployment Rises to 8.3 Pct., Job Creation Strengthens By: Bill McGuire and Susanna Kim The economy added a robust 163,000 jobs in July but unemployment rose to 8.3 percent as fewer people participated in the work force, the Labor Department reported Friday. With only three months to go before the presidential election, the country is eyeing the nation's unemployment to assess the state of the U.S. economy. The jobs report was mostly good news and stocks advanced. June's revised report showed that employers added just 64,000 jobs that month. "This jobs report has very mixed news ranging from a decent payroll growth number of +163k, to very disappointing numbers from the household survey," said Stephen Bronars, chief economist with Welch Consulting. "In the household survey the unemployment rate increased from 8.2 to 8.3, the employment to population ratio fell and the participation rate fell in July. Those are all very troubling." Unemployment has been above 8 percent for 41 consecutive months. The Labor Department report showed that the actual number of Americans working dropped by 195,000. That means the net gain reported in July was due to seasonal adjustments. Like most of his colleagues, Bronars expected the unemployment rate to remain at 8.2 percent with an addition of just over 100,000 jobs. Many economists had expected 100,000 jobs would be added to the U.S. economy. "After today's report there are only three more reports before the election, so everyone is looking for some kind of evidence that the labor market slowdown will be reversed. That seems unlikely based on the numbers that we have seen in the past few weeks," he said. "It should also be remembered that there is a large seasonal adjustment in July. Taken together this means that we can't be very happy with the overall jobs report. There are too many negatives in the household survey and much of the gain of 163k is due to a large seasonal adjustment," Bronars added. But Bronars cautioned into reading too much into the estimated change in jobs in July. Other than December to January, June to July has the biggest seasonal adjustment factor. The headline number is a seasonally adjusted number, taking into account that employment in July is typically much lower than in June. Bronars said seemingly small differences in seasonal adjustments from one year to the next can cause a swing of more than 100,000 jobs in the headline report for job growth. What concerns Bronars is that last month the number of people unemployed for five weeks or less increased to its highest value in a year. In the past two months, new jobless claims have been higher than earlier in the year also. "If we continue to see increases in the number of people entering unemployment its a sign that the labor market remains weak," Bronars said. On Thursday, the Labor Department reported that weekly jobless claims rose to 365,000 for the week ending July 28 from the previous week's revised figure of 357,000. The figure was lower than the expected 370,000. The four-week moving average fell to 366,000 from 368,000. Though the net decline in claims from a month ago is "encouraging," according to Jim O'Sullivan, chief U.S. economist with High Frequency Economics, it was subject to short-term distortions and describes two weeks after the sample for Friday's employment report was taken. Among other lingering problems for the nation's unemployed, Bronars pointed out that construction employment has been unchanged in the past two years and remains down more than 2 million, or about 28 percent, from 2007. He said the continued weakness in he housing sector is a problem for construction workers who have been out of work, or underemployed, for years. And not unexpectedly, unemployment is worst for those without skills. Ninety-two percent of the employment gains in the past year have been for workers with more than a high school diploma.
Source: Bloomberg.com Jobs Gains Topping Forecasts Ease U.S. Slowdown Concerns By: Shobhana Chandra The U.S. economy generated more jobs than forecast in July as automakers and health-care providers boosted employment, easing concern the three-year expansion is faltering, even as the unemployment rate unexpectedly rose. The payrolls increase of 163,000 followed a revised 64,000 gain in June, Labor Department figures showed today in Washington. The median estimate of 89 economists surveyed by Bloomberg called for a gain of 100,000. The jobless rate, based on a separate survey of households, climbed to a five-month high of 8.3 percent. Stocks rallied, sending the Standard & Poor’s 500 Index to the highest level since May, as the jobs data countered recent reports showing a contraction in manufacturing and slower consumer demand. Faster job growth is needed to push down an unemployment rate that has been stuck above 8 percent since February 2009, one reason why the Federal Reserve this week said it is prepared to take new steps if needed to boost the economy. “ Today’s numbers are better but not good enough,” said Brian Jones, a senior U.S. economist for Societe Generale SA in New York, who predicted payrolls would rise by 165,000. “We’re stuck in a channel of lackluster growth.” The S&P 500 advanced 1.9 percent to 1,390.99 in New York after dropping 1.5 percent in the previous four days. The yield on the 10-year Treasury note climbed to 1.57 percent from 1.48 percent late yesterday. Separately, figures from the Institute for Supply Management today showed that the non-manufacturing businesses making up about 90 percent of the economy expanded at a faster pace in July than a month earlier. Private Payrolls The Labor Department data showed that private payrolls, which exclude government agencies, rose 172,000, exceeding the forecast for a gain of 110,000. Including the July gain, the U.S. has recovered 4 million of the 8.8 million jobs lost as a result of the 18-month recession that ended in June 2009. Among those who have found a job is Clayton Hopkins, 25. He’s starting work on Monday as a communications specialist at the San Francisco office of ICF International Inc., a consulting company. With a salary that will be 30 percent more than what he was paid at his previous job, he’s planning on splurging on either an Apple Inc. iPad or a Google Inc. Nexus 7 tablet, in addition to a laptop. “ I’m ecstatic,” said Hopkins, who gets together with friends periodically to share job-hunting tips. “It’s pretty grim out there, so I’m excited to be doing something that both feeds my soul and my wallet.” Employment at private service providers increased 148,000, the most in five months and reflecting more jobs in education and health services. Construction companies cut payrolls by 1,000 workers, while retailers added 6,700. Factory Employment Factory payrolls rose by 25,000, more than twice the survey forecast of a 10,000 increase and boosted by a 12,800 pickup in employment at makers of motor vehicles and parts. The figures may have reflected fewer shutdowns at automakers for annual retooling related to the new model year, indicating the jump will be reversed this month. Chrysler Group LLC and Ford Motor Co. (F) are among companies that said they would idle fewer plants. Honda Motor Co. (7267) is looking to expand. The Tokyo-based automaker, which relies on U.S. vehicle sales for more than half its profit, said it is investing $40 million at its Greensburg, Indiana, plant that produces the Civic compact and will hire 300 workers later this year. Today’s report showed a decline in long-term unemployment. The number of people out of work for 27 weeks or more decreased as a percentage of all jobless, to 40.7 percent, from 41.9 percent. Cisco Systems Some companies are cutting back. Cisco Systems Inc. (CSCO), the biggest maker of computer-networking equipment, plans to eliminate about 1,300 jobs, or 2 percent of the workforce, as Europe’s debt crisis and sluggish corporate spending threaten sales. Financial firms are also trimming jobs as revenue softens. Morgan Stanley (MS) said its headcount will drop by about 700 in the second half, bringing total 2012 reductions to 4,000. Credit Suisse Group AG will eliminate 138 positions in New York starting this month. Deutsche Bank AG will cut about 1,900 jobs by year-end, mostly outside Germany. The lender is also shrinking compensation and benefits. Charlie Jones, a Washington resident, has been out of work for more than a year. He says he is relying on food stamps for meals while his girlfriend pays the rent. He signed up with a temporary agency for jobs in office installation and is searching actively for other openings. ‘ Tough’ Market “ It’s a very tough job market,” said Jones, 35. “It’s discouraging. I keep waiting but they haven’t called me in a long time. I have a friend like me who recently got work, so I think hopefully something should turn up for me.” The unemployment rate was forecast to hold at 8.2 percent, according to the survey median. Estimates in the Bloomberg survey ranged from 8.1 percent to 8.3 percent. The report showed more people left the labor force. The jobless rate is derived from a survey of about 60,000 households that is conducted by the Census Bureau. The change in payroll employment is derived from a Labor Department survey of almost 500,000 worksites. Today’s figures provided Republican presidential candidate Mitt Romney a fresh chance to highlight discontent over the economy even as President Barack Obama sought to pre-empt him with a swing-state ad campaign attacking the challenger’s tax plan. “ Today’s increase in the unemployment rate is a hammer blow to struggling middle-class families,” Romney said in a statement released by his campaign today. Tax Cuts Alan Krueger, chairman of the White House Council of Economic Advisers, used the report to renew the administration’s call for lawmakers to extend tax cuts for Americans earning less than $250,000 a year and act on Obama’s proposals for spending on infrastructure. The jobs numbers show the economy is “continuing to heal from the very deep wounds” of the recession, Krueger said in a Bloomberg Television interview. Still, “the unemployment rate is too high.” The so-called underemployment rate -- which includes part- time workers who’d prefer a full-time position and people who want work but have given up looking -- increased to 15 percent from 14.9 percent. Fed officials, after meeting this week, left unchanged their statement that economic conditions would likely warrant holding the benchmark interest rate target near zero at least through late 2014. They said unemployment “remains elevated.” ‘ Closely Monitor’ Policy makers “will closely monitor incoming information on economic and financial developments and will provide additional accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability,” the Fed statement said. Today’s employment report probably doesn’t change the outlook for further easing by Fed policy makers at their next meeting on Sept. 12-13, said Drew Matus, a U.S. economist at UBS Securities in Stamford, Connecticut. “ It’s not good enough to take the Fed off the table, but it’s not bad enough for anyone to say definitively the Fed is going to move in September,” Matus said in a telephone interview. Monthly payroll growth of about 100,000 is needed to keep the jobless rate stable, while growth of roughly 150,000 to 200,000 is needed to lower unemployment, Fed Chairman Ben S. Bernanke said at a news conference in April, citing a “very rough estimate.” Growth Slows Gross domestic product grew at 1.5 percent annual rate in the second quarter after a 2 percent gain in the first three months of the year, according to figures from the Commerce Department. Household purchases, which account for about 70 percent of GDP, grew at the slowest pace in a year. The so-called fiscal cliff, in which taxes will rise and government agencies will reduce spending next year if Congress doesn’t act, raises the risk of more cutbacks. Lockheed Martin Corp. (LMT), the world’s largest defense contractor, may have to dismiss about 10,000 of its 120,000 employees if lawmakers don’t act before $1.2 trillion in across-the-board cuts to federal spending, according to Robert Stevens, the Bethesda, Maryland- based company’s chief executive officer.
Source: CNNMoney.com July Jobs Report: Hiring Picks Up, Unemployment Rises By: Annalyn Censky Businesses stepped up their hiring in July, but the unemployment rate ticked higher anyway. Employers said they added 163,000 jobs in the month, according to a Labor Department report released Friday, much better than the 95,000 jobs economists had forecast. But at the same time, the unemployment rate unexpectedly rose to 8.3% as households claimed they lost 195,000 jobs. The government's monthly jobs report comes from two separate surveys: one that looks at employer payrolls, and the other which questions households. Those two reports went in opposite directions in July, confusing the overall reading on the job market. "There are two sides of this report, and unfortunately both sides are not telling us the same thing," said Ellen Zentner, senior U.S. economist for Nomura. "This is a report showing the economy expanded at a greater pace in July than in June, but households are still telling us they're in pain." The household survey showed 150,000 people dropped out of the job market. About 852,000 "discouraged workers" were not counted in the labor force, because they did not look for a job in the last four weeks. The so called "underemployment rate" rose to 15%, its highest level since January. That includes people who are unemployed, as well as those who are working part-time because they can't find full-time jobs, and those that have looked for a job sometime in the last year. According to the employer survey though, hiring picked up at a strong pace, but the quality of many of those jobs is questionable. Some of the biggest gains were at restaurants and bars, which hired 29,000 workers. Auto factories also hired 12,800 workers, but that improvement could be misleading given seasonal adjustments that may have artificially inflated the number, economists said. "That's a temporary boost that comes in July and won't be there in August," Zentner said. Temporary firms continued their hiring streak, creating 14,100 jobs in July. "We're seeing the temp hiring is a permanent trend," said Kathy Kane, senior vice president of talent management at Adecco Group North America. "We're hiring across the board in all industries." Kane noted that the demand for temp workers with finance, technology or health care experience in particular is so strong, the firm often has trouble finding enough qualified applicants. That skills mismatch may be part of the reason households are still so discouraged, she said. "I think you're seeing a lot of people feeling the pain of what's going on right now," Kane said. "We're having this political divide, blaming and finger pointing each other about how to bring jobs back. The reality is we're not bringing back the jobs we lost. The jobs of the future are new jobs." The education sector was a bright spot, adding 19,100 jobs, as was health care, which added 12,000 jobs. Meanwhile, the public sector continues to be a drag on overall hiring. The government cut 9,000 jobs in the month, including cuts at the federal, state and local levels. The job market has a long way to go to climb out of the deep hole left by the financial crisis. Of the 8.8 million jobs lost, only about 4 million have been added back. Three years after the recession officially ended, roughly 12.8 million Americans remain unemployed, and 40.7% of them have been so for six months or more.
Source: WhiteHouse.Gov The Employment Situation in July By: Alan Krueger While there is more work that remains to be done, today’s employment report provides further evidence that the U.S. economy is continuing to recover from the worst downturn since the Great Depression. It is critical that we continue the policies that build an economy that works for the middle class as we dig our way out of the deep hole that was caused by the severe recession that began in December 2007. To build on the progress of the last few years, President Obama has proposed an extension of middle class tax cuts that would prevent the typical middle class family from facing a $2,200 tax increase next year. In addition, to create more jobs in particularly hard-hit sectors, President Obama continues to support the elements of the American Jobs Act that have not yet passed, including further investment in infrastructure to rebuild our Nation’s ports, roads and highways, and assistance to State and local governments to prevent layoffs and rehire hundreds of thousands of teachers and first responders. Today’s report from the Bureau of Labor Statistics (BLS) shows that private sector establishments added 172,000 jobs last month, and overall non-farm payroll employment rose by 163,000. The economy has now added private sector jobs for 29 straight months, for a total of 4.5 million jobs during that period. The household survey showed that the unemployment rate ticked up to 8.3% in July (or, more precisely, the rate rose from 8.217% in June to 8.254% in July). Acting BLS Commissioner John Galvin noted in his statement that the unemployment rate was “essentially unchanged” from June to July. The establishment survey indicated that manufacturing employment continues to expand and manufacturers added 25,000 jobs in July. After losing millions of manufacturing jobs in the years before and during the recession, the economy has added 532,000 manufacturing jobs since January 2010 – the strongest growth for any 30-month period since June 1989. Within manufacturing, motor vehicles and parts added 12,800 jobs in July, its strongest monthly growth since January 2011, partly reflecting fewer seasonal layoffs last month. To continue the revival in manufacturing jobs and output, President Obama has proposed tax incentives for manufacturers, enhanced training for the workforce, and measures to create manufacturing hubs and discourage sending jobs overseas. Other sectors with net job increases included professional and business services (+49,000), education and health services (+38,000), leisure and hospitality (+27,000), and wholesale trade (+9,200). Within leisure and hospitality, restaurant employment rose by 29,400 jobs. Government lost 9,000 jobs as State government payrolls fell by 6,000. Local governments shed 7,000 education jobs. Since February 2010, State and local governments have lost 485,000 jobs. As the Administration stresses every month, the monthly employment and unemployment figures can be volatile, and employment estimates can be subject to substantial revision. Therefore, it is important not to read too much into any one monthly report and it is informative to consider each report in the context of other data that are becoming available.
Source: BLS
Source: BLS
The graph’s data is solely based on the BLS’ “Metropolitan Area Employment and Unemployment Summary – June 2012” report, which was published on August 1, 2012.
Source: Moody’s Analytics/DismalScientist.com United States: Challenger Report By: Aaron Smith First Take Challenger layoffs declined for a second straight month in July as employers announced job cuts totaling 36,855, down 2% from June and the lowest since April 2011. Planned layoffs are down 45% from a year ago, an indication that businesses are not panicking by cutting workers in response to the euro area crisis and domestic fiscal concerns. Hiring plans slipped in July, though at 10,350, planned additions were not far from the year-to-date average. The Numbers The number of announced layoffs fell for a second straight month in July to 36,855, down 2% from June and the lowest since April 2011. Job cuts in July were down 45% from a year ago. Overall, employers have announced 319,946 job cuts so far this year, up 2.5% from the same period in 2011. There were significantly fewer layoffs in the computer, education, media, pharmaceutical and telecommunications industries, while planned cuts were noticeably higher in automotive, electronics, retail, transportation, healthcare and financial industries. July job cuts were the greatest in the financial industry, which announced 6,156 planned layoffs during the month. Cuts announced by Morgan Stanley and Citigroup contributed to the largest number of planned layoffs by this industry since January. Despite announcing fewer planned layoffs in July, the computer industry leads all others in job cuts this year. From January to July, computer firms have announced 35,006 cuts, about triple the total for the same period in 2011. Transportation and retail ranked second and third in planned layoffs this year behind the computer industry with cuts of 29,965 and 27,925, respectively, in the first seven months of 2012. The recent slowing in foreign trade and consumer spending is likely partly to blame as employers respond to weaker demand. Among the reasons for the job cut announcements, restructuring, closing and cost-cutting predominate. Note that the weak economy does not rank highly, with just 8% of those that announced cuts in July citing it as the biggest reason. In July, companies announced hiring plans that will add 10,350 jobs. Year to date, only 72,858 such plans have been publicized, down sharply from the 209,042 planned additions in the first seven months of 2011. Behind the Numbers While the economy is weak and downside risks are significant, the labor market appears to be holding up for now. The number of job cuts decreased only modestly in July but is down significantly from a year ago and is the lowest in more than a year. The direction of job cuts is especially encouraging, as the total for the full year is actually up slightly from the same period in 2011. The biggest cuts in July were in financial services, with planned layoffs about double what they were in the prior month. Many of the announcements were for jobs on Wall Street, as the fallout from the euro area crisis impacts financial institutions' performance. New York had the highest number of planned cuts across states. There were also signs that the slowing in foreign trade and consumer spending is having an impact with the second and third most cuts this year made by transportation and retail industries, respectively. On the upside, the drag on the labor market from the public sector is easing, with planned layoffs from January to July only about 15% of the total for the same period in 2011. While businesses do not appear to be panicking by cutting workers because of concerns about Europe and domestic fiscal policy, limited hiring plans suggest they are behaving cautiously. Hiring plans slipped in July and for the year are running well below last year’s total. Other hiring-related indicators such as the manufacturing ISM employment index and our proprietary business confidence survey hiring plans index also suggest that businesses are slow to add to their workforces, a trend that seems likely to persist until demand improves and uncertainty diminishes.
Source: WashingtonPost.com U.S. Added 163,000 Jobs in July; Unemployment Rate Ticks Up to 8.3 Percent By: Peter Whoriskey The U.S. economy added more jobs in July, but the unemployment rate ticked up to 8.3 percent, the Labor Department reported. The monthly jobs figures released on Friday offered both good and bad news. On the one hand, payrolls expanded by 163,000 people, a promising rise after three straight months of disappointing job gains. Jobs in manufacturing rose by 25,000; there were 9,000 fewer jobs in government. “ It would appear that the slow patch we’ve had since April is over,” Gus Faucher, senior macro economist at PNC Financial Services Group, said before the release of the numbers. But the rate of unemployment nevertheless rose from 8.2 percent to 8.3 percent. It was a small enough difference in the rate that the Labor Department called it “essentially unchanged,” but more Americans are looking for work. The jobless rate has been above 8 percent since February 2009. “ It just looks like we’re moving sideways,” said Paul Ashworth, chief U.S. economist for Capital Economics. In remarks on Friday afternoon, President Obama noted that the economy has added private sector jobs for 29 straight months, for a total of 4.5 million jobs. “ But let’s acknowledge that we still have too may folks out there still looking for work, more work to do on their behalf -- not just to reclaim all the jobs lost during the recession but also to reclaim the financial security many Americans feel has been slipping away from them,” Obama said. The president called on Congress to approve his proposal to keep the George W. Bush-era tax cuts for families earning less than $250,000 a year and praised the Senate for voting this week to approve the plan. But he criticized the House for approving an alternative plan that would extend the tax cuts for all income levels, including high-income earners. “ The House voted to hold the middle class tax cuts hostage unless we also spend $1 trillion over the next decade for tax cuts for the wealthiest 2 percent of Americans,” he said. Friday morning, Republican candidate Mitt Romney focused on the dismal aspects of the report. “ Today’s increase in the unemployment rate is a hammer blow to struggling middle-class families,” Romney said in a statement. “We’ve now gone 42 consecutive months with the unemployment rate above eight percent. Middle class Americans deserve better, and I believe America can do better.” Obama has shrugged off such remarks and derided Romney’s plans, referring to them as “top down economics” that aid the rich by punishing the middle class. The White House has focused instead on the economy’s emergence from the recession, despite the ongoing woes in the European economy. “ While there is more work that remains to be done, today’s employment report provides further evidence that the U.S. economy is continuing to recover from the worst downturn since the Great Depression,” Alan Krueger, chairman of the White House Council of Economic Advisers, said in a statement. Even so, the broadest measures of the U.S. employment situation show continuing difficulties in the job market. More people, for example, left the labor force, either retiring or giving up the search for work. Of those people remaining in the civilian labor force, a slightly larger portion are unable to find work - hence the uptick in the unemployment rate. About 12.8 million people in the U.S. are unemployed.
Source: Economix.Blogs.NYTimes.com What the Jobs Numbers Mean for Fed Policy By: Catherine Rampell Before the July jobs report was released on Friday, Wall Streeters assumed that the Federal Reserve would deliver more stimulus as soon as its next meeting in September. While the latest report turned out to be better than economists had forecast, it was probably still not sufficiently spectacular to change those expectations of the Fed. There are a few reasons to believe the Fed is still on the same track that it was on a day earlier. Chief among them is that despite the rosy headline payroll number, many of the underlying details of the July report were very weak — especially those coming from the Labor Department’s survey of American households. The Labor Department draws its jobs numbers from two surveys, one sent to employers and one sent to households. The one sent to employers was the survey that delivered an upside surprise — the net gain of 163,000 nonfarm jobs. The household survey, however, showed the opposite trend: that the number of people who were working actually fell in July rather than rising. It showed a pretty sharp decline, too, of 195,000 fewer people working. It also reported that the number of people in the labor force — that is, the people who were working or actively looking for work — fell as well, indicating that more people may be giving up on looking for jobs. The decline in the number of Americans who are working brought the unemployment rate a tick higher to 8.3 percent in July, from 8.2 percent in June (although the difference between the two rates is not statistically significant). That means the jobless rate has basically stagnated since January. A broader measure of unemployment — one that includes people working part time who want to be working full time, and people who have given up looking for work because they’re discouraged — has been rising steadily since April. It is now 15 percent. The household survey is much more volatile than the payroll survey because the sample size is much smaller. The household survey showed that the labor force grew by 156,000 in June and then immediately shrank by 150,000 in July, for example. Even so, the Fed measures its mandate more in terms of the household survey than the payroll survey, my colleague Binyamin Appelbaum (who covers the Fed) tells me, because the household survey measures workers rather than jobs and includes a broader range of occupations. For example, the household survey includes workers who are self-employed, and the payroll survey does not. The household survey is also more likely to capture job growth that is being created by new businesses, which are relatively unlikely to be included in payroll surveys since the Labor Department doesn’t know they exist yet. Even given the household survey’s expected volatility, the unemployment rate has remained remarkably consistent since January. That steady rate of around 8.2 percent is also at the upper end of the central tendency that the Fed reported in its June forecast for economic conditions this year. Many of the other numbers from the payroll survey, I should note, were likewise lackluster, if not outright bad. The length of the work week was unchanged, and hourly earnings barely moved. In fact, year over year, the percent change in hourly earnings is at record lows. None of these indicators suggest that the economy is headed right back into recession. Nonetheless, put together, economists believe that the latest data portray an recovery that’s slow enough to warrant more Fed intervention.
Source: WhiteHouse.Gov Advance Estimate of GDP for the Second Quarter of 2012 and Annual Revision By: Alan Krueger Today’s report shows that the economy posted its twelfth straight quarter of positive growth, as real GDP (the total amount of goods and services produced in the country) grew at a 1.5 percent annual rate in the second quarter of this year, according to the “advance” estimate released by the Bureau of Economic Analysis. Over the last three years, the economy has expanded by 6.7 percent overall, and the private components of GDP have grown by 9.9 percent. While the economy continues to move in the right direction, additional growth is needed to replace the jobs lost in the deep recession that began at the end of 2007 With today’s report, the BEA also released its annual revisions back to 2009. While the revisions did not meaningfully change the pace of growth over that entire period, it is noteworthy that State and local government purchases were revised up in 2009, which is consistent with the Recovery Act cushioning the effect of the recession and helping to launch the recovery. Since the Recovery Act funds have been phasing out, however, declining State and local government activity has subtracted from GDP. Indeed, today’s report indicates that State and local government purchases have declined for 11 straight quarters, the longest streak ever recorded since the official record of quarterly data began in 1947. To strengthen economic growth and increase job creation, President Obama has proposed to Congress a plan that would help State and local governments retain and hire teachers and first responders, assist the construction sector and economy of tomorrow by rebuilding and modernizing our Nation’s infrastructure, and would give small businesses tax cuts to encourage them to increase payroll. President Obama also proposed extending tax cuts to protect middle class families and virtually every small business owner from getting a tax increase at the beginning of next year. The Senate passed the President’s plan this week and President Obama has said that as soon as the House will act he will sign it right away in order to give certainty and security to middle class families. Extending these tax cuts would provide more certainty for the economy for 98 percent of American families and 97 percent of small business owners.
Source: WashingtonPost.com The Jobs Report in Six – Nay, Seven! – Charts By: Dylan Matthews The July job report was an improvement on the previous month’s, but still not great. Let’s see how it broke down. Unemployment and Payroll Numbers Unemployment remained “essentially unchanged,” in the Bureau of Labor Statistics’ words, nudging up to 8.3 percent from 8.2 percent. This was despite an increase of 163,000 in nonfarm payrolls, more than double the increases in April, May and June and the best month in that department since February. Public and Private Public employment continued to shrink, falling by 9,000 in July alone, reflecting continued austerity policies (note: the big increase in public employment in 2010 was due to the Census, rather than any stimulus policies). The Hamilton Project notes that if the normal path of employment growth over the 2000s persisted, there would be 1.7 million more government jobs. Alternative Unemployment Measures As I explained last month, the BLS releases six unemployment measures. There’s U3, the number that shows up in all the news article, which counts people who don’t have jobs, but have looked for one in the past four weeks, but U1, U2, U4, U5 and U6 exist as well. U1 and U2 are usually lower than U3, and measure the percentage of people who have been unemployed for 15 weeks or longer and the percentage who have lost jobs or done temporary work in the period in question, respectively.U4, U5 and U6 are usually higher than U3. Each of these categories includes everyone in all the lower categories: all people in U3 are in U4, all people in U4 are in U5, and all people in U5 are in U6. U4 adds people who have stopped looking for work because they’ve concluded none is available. U5 adds people who would like to work but for whatever reason have not looked for work recently. U6 adds the underemployed, or part-time workers who want to be working full-time but cannot for whatever reason. The six measures track each other fairly well, and the alternative metrics have stagnated along with U3 of late. Sectors Different industries continue to exhibit widely varying degrees of success. Education, health, and mining and logging (including coal and oil) are doing fine, construction is struggling. Wages Wages continue to rise, albeit only for those lucky employed people earning them.
Source: WashingtonPost.com The Jobs Report in Six – Nay, Seven! – Charts By: Dylan Matthews The July job report was an improvement on the previous month’s, but still not great. Let’s see how it broke down. Unemployment and Payroll Numbers Unemployment remained “essentially unchanged,” in the Bureau of Labor Statistics’ words, nudging up to 8.3 percent from 8.2 percent. This was despite an increase of 163,000 in nonfarm payrolls, more than double the increases in April, May and June and the best month in that department since February. Public and Private Public employment continued to shrink, falling by 9,000 in July alone, reflecting continued austerity policies (note: the big increase in public employment in 2010 was due to the Census, rather than any stimulus policies). The Hamilton Project notes that if the normal path of employment growth over the 2000s persisted, there would be 1.7 million more government jobs. Alternative Unemployment Measures As I explained last month, the BLS releases six unemployment measures. There’s U3, the number that shows up in all the news article, which counts people who don’t have jobs, but have looked for one in the past four weeks, but U1, U2, U4, U5 and U6 exist as well. U1 and U2 are usually lower than U3, and measure the percentage of people who have been unemployed for 15 weeks or longer and the percentage who have lost jobs or done temporary work in the period in question, respectively.U4, U5 and U6 are usually higher than U3. Each of these categories includes everyone in all the lower categories: all people in U3 are in U4, all people in U4 are in U5, and all people in U5 are in U6. U4 adds people who have stopped looking for work because they’ve concluded none is available. U5 adds people who would like to work but for whatever reason have not looked for work recently. U6 adds the underemployed, or part-time workers who want to be working full-time but cannot for whatever reason. The six measures track each other fairly well, and the alternative metrics have stagnated along with U3 of late: Sectors Different industries continue to exhibit widely varying degrees of success. Education, health, and mining and logging (including coal and oil) are doing fine, construction is struggling. Wages Wages continue to rise, albeit only for those lucky employed people earning them.
Source: WashingtonPost.com The Jobs Report in Six – Nay, Seven! – Charts By: Dylan Matthews The July job report was an improvement on the previous month’s, but still not great. Let’s see how it broke down. Unemployment and Payroll Numbers Unemployment remained “essentially unchanged,” in the Bureau of Labor Statistics’ words, nudging up to 8.3 percent from 8.2 percent. This was despite an increase of 163,000 in nonfarm payrolls, more than double the increases in April, May and June and the best month in that department since February. Public and Private Public employment continued to shrink, falling by 9,000 in July alone, reflecting continued austerity policies (note: the big increase in public employment in 2010 was due to the Census, rather than any stimulus policies). The Hamilton Project notes that if the normal path of employment growth over the 2000s persisted, there would be 1.7 million more government jobs. Alternative Unemployment Measures As I explained last month, the BLS releases six unemployment measures. There’s U3, the number that shows up in all the news article, which counts people who don’t have jobs, but have looked for one in the past four weeks, but U1, U2, U4, U5 and U6 exist as well. U1 and U2 are usually lower than U3, and measure the percentage of people who have been unemployed for 15 weeks or longer and the percentage who have lost jobs or done temporary work in the period in question, respectively.U4, U5 and U6 are usually higher than U3. Each of these categories includes everyone in all the lower categories: all people in U3 are in U4, all people in U4 are in U5, and all people in U5 are in U6. U4 adds people who have stopped looking for work because they’ve concluded none is available. U5 adds people who would like to work but for whatever reason have not looked for work recently. U6 adds the underemployed, or part-time workers who want to be working full-time but cannot for whatever reason. The six measures track each other fairly well, and the alternative metrics have stagnated along with U3 of late: Sectors Different industries continue to exhibit widely varying degrees of success. Education, health, and mining and logging (including coal and oil) are doing fine, construction is struggling. Wages Wages continue to rise, albeit only for those lucky employed people earning them.
Source: Moody’s Analytics/DismalScientist.com In July, Brazil’s trade surplus widened to $2.879 billion, up from $806 million in June. Exports fell 5.6% y/y, and imports fell 5.2% y/y. Trade disputes between Argentina and Brazil lead to a hold-up of goods and are responsible for part of the decline in imports and exports. Increased protectionism and sluggish domestic demand will weigh on imports and exports for the remainder of the year.
Source: Moody’s Analytics/DismalScientist.com Chile’s central bank extended the monetary pause because inflation is declining in an economy expanding at above-trend rates. The excess demand generated by the ongoing expansionary policy is mostly accommodated in imports rather than in prices, which combined with declining international prices explains the inflation decline. As a result, the policy committee decided to leave the benchmark interest rate unchanged in July, leaving it at its previous level of 5%. Monetary conditions remain in expansionary territory.
Source: Moody’s Analytics/DismalScientist.com The euro zone business and consumer confidence index fell to 87.9 in July, the lowest point in almost three years, from 89.9 in the previous month. The outcome was broadly in line with the Moody’s Analytics forecast but below Bloomberg market consensus forecasts. Both business and consumer confidence deteriorated. The fall in sentiment supports our view that the euro zone is already in a mild recession.
Source: Moody’s Analytics/DismalScientist.com French manufacturers’ confidence deteriorated in July for the fourth month. The composite indicator fell to 90, its lowest in more than two years, from a revised 91 in June. The main drivers were declines in the production outlook and foreign orders subindexes. The outcome was in line with the Moody’s Analytics forecast but below the Bloomberg market consensus expectation. Confidence will remain under pressure in the coming months as weaker economic activity in France and its key European trading partners reduces demand for local manufactured products.
Source: Moody’s Analytics/DismalScientist.com Investor confidence has been affected by the worsening outlook because of the still-uncontained sovereign debt crisis. The euro zone ZEW indicator of economic sentiment index decreased to -22.3 from -20.1 a month earlier, and the measure for Germany declined to -19.6 from -16.9 previously. The economic outlook has worsened despite the progress towards the banking union at the EU summit at the end of June. High-frequency indicators point to a slowdown of the German economy while other large euro area countries such as Italy and Spain are already in a recession.
Source: Moody’s Analytics/DismalScientist.com Italian consumer confidence improved slightly in July from an all-time low in the previous month. The headline measure rose to 86.5 from 85.4 in June. The outcome was above the Moody’s Analytics forecast of 85. Despite this improvement, consumer confidence will remain under pressure from an intensifying European debt crisis, rising unemployment, fiscal tightening across Europe, and elevated price pressure.
Source: Moody’s Analytics/DismalScientist.com As expected but surprising to markets, the Bank of Japan beefed up its asset purchase program, buying an extra ¥5 trillion treasury discount bills. Asset purchases are now ¥45 trillion of the total program. The BoJ reduced its loan program by ¥5 trillion down to ¥25 trillion as demand for these funds are weak. The total quantitative easing program thus remained steady at ¥70 trillion (about $860 billion). The bank’s updated forecast show a slight downward revision to near-term GDP growth, and core inflation is holding well below its 1% goal. This paves the way for further monetary easing in coming months, while intervention in currency markets to lower the yen remains on the cards.
Source: Moody’s Analytics/DismalScientist.com Russia's reserve fund totaled RUB1.93 trillion by early August. The fund received an injection of cash in January, as the government ran a fiscal surplus in 2011. The fund remains below its levels in 2008 and 2009, when the money was used to stimulate the economy during the recession. No additional transfers into the fund are expected in the coming months.
Source: Moody’s Analytics/DismalScientist.com Korea's consumer sentiment index eased to 100 in July, which was as expected. This indicates that net confidence is now neutral after being strongly positive earlier in the year, and is consistent with consumer spending growing but at a below-trend rate.
Source: Moody’s Analytics/DismalScientist.com Business confidence in Spain improved in July. The balance of opinion gauge rose to -17 from -19 previously. Despite the improvement, sentiment will remain weak in the coming months. Spain has entered its second recession in three years with the unemployment rate soaring above 20%. The country's banking sector needs official EU aid, and the government is under pressure from financial markets as tensions over the European debt crisis remain elevated.
Source: Moody’s Analytics/DismalScientist.com The Bank of Thailand left its policy rate on hold at 3%, where it has been since January. Inflation is well contained, allowing the central bank to focus on shoring up growth. Much of the Bank of Thailand’s concern centers around Europe’s debt crisis and the harm it is already causing and could further cause for export demand, financial markets and confidence. An easing bias remains, but the policy rate will likely remain on hold for the rest of the year.
Source: Moody’s Analytics/DismalScientist.com U.K. consumer confidence was unchanged at -29 in July. Recent positive data—falling inflation and lower unemployment—were offset by persistent poor weather. Sentiment will remain subdued through 2012 because of weak consumer fundamentals, including muted wage growth, a lackluster property market, and job security concerns.
Source: Moody’s Analytics/DismalScientist.com Inflation in Uruguay decelerated for the second consecutive month. Inflation increased 7.5% y/y in July, down from an increase of 8% in June. Lower prices were driven by drops in housing and apparel costs. Annual inflation is expected to remain between 7.5% and 8.5% for the remainder of the year, causing the central bank to miss its inflation target of 4% to 6%.
Source: Moody’s Analytics/DismalScientist.com Vietnam’s monthly trade balance was in a US$100 million surplus in July after a revised US$361 million surplus in June (previously reported as a US$150 million deficit). A rise in imports led the revised trade surplus to narrow in July. Domestic demand appears to be gathering steam after earlier monetary tightening. Exports have been resilient through global headwinds, although there was a deceleration in July.
