August 1, 2008

ISM Manufacturing: Half-Full, Half-Empty

Filed under: Economy — Tom @ 10:04 am

Reported consensus predictions (a reading above 50 means expansion, and below 50 means contraction; June’s reading was a slight expansion of 50.2):
- RTT News — 49.5
- CEP News — 49.0
- Jody Osborne at Forbes — 49.2

The envelope, please:

July 2008 Manufacturing ISM Report On Business®
PMI at 50%

Economic activity in the manufacturing sector was unchanged in July, while the overall economy grew for the 81st consecutive month, say the nation’s supply executives in the latest Manufacturing ISM Report On Business®.

The report was issued today by Norbert J. Ore, C.P.M., chair of the Institute for Supply Managementâ„¢ Manufacturing Business Survey Committee. “In this month’s report, manufacturers indicate no change in overall business activity when comparing July to June. This continues a trend biased toward relatively minor contraction established more than 12 months ago.

So it’s the half-full or half-empty scenario. I’ll take half-full because it clearly beat expectations.

While we’re on the subject of ISM, I would think that the people who want the recession inventors at the National Bureau of Economic Research (NBER) to conclude that there was a recession sometime for a few months during the fourth quarter of 2007 or first quarter of 2008 are going to have to have a serious sit-down with the ISM folks who clearly saw no break in positive economic growth during that time.

I say “recession inventors” because I am coming to believe that we are the only country that gives over the definition of “recession” to a bunch of supposedly “non-partisan” experts. I don’t have a link at the moment, but I remember the BBC reporting that the UK’s definition is what normal people have always used: two consecutive quarters of negative economic growth. That’s my definition too (“A period of general economic decline; specifically, a decline in GDP for two or more consecutive quarters.”), and I believe the rest of the world’s, and I’m sticking to it.

Next Tuesday’s ISM Non Manufacturing Index looms large. It stumbled into contraction (48.2) in June and took everyone by surprise.

The Government’s July Employment Report

Filed under: Economy,Taxes & Government — Tom @ 8:25 am

Geez, I wanted to get to this earlier, but two sluggish browsers and having to restart everything to get back on track got in the way. Here goes.

The Run-up

ADP’s National Employment Report came in Wednesday with +9,000 private nonfarm jobs. If I recall correctly that was seen as a bit of a surprise on the upside. I’m going to look at the ongoing disparity between ADP and BLS after digesting the post-release numbers later this morning.

The estimates I’ve seen are these:

  • RTT News – seasonally adjusted total employment to going down by 72,000 jobs, unemployment rising to 5.6%;
  • MarketWatch – jobs down 70,000; rate up to 5.6%;
  • Thomson Financial via Forbes – Jobs down 72,000, rate up to 5.6%;
  • Blah3.com is going the outlier route, and predicting over 100,000 jobs lost, without specifying an unemployment rate.

The key question

Since the change in seasonally adjusted employment reported widely actually depends on how the current month’s actual job additions or reductions compared to previous years, I should note that this is how the previous three years have come in:

BLSjobsAdded0608

So the key question is really whether July’s normally-occurring reduction will above or below the trend of previous years (the seasonal adjustment calculation considers a lot more than the past 3, but you get the point). I’m guessing that the number may come in at -1.2 million, which will mean a reported seasonally adjusted job loss that is slightly smaller than expected.

Having said that, this may take place for an ironic reason. You see, the primary reason for normal July decline is that teachers are not teaching during the summer months (even though most spread their pay over 12 months). But if those teachers are feeling less than secure about their situation, more of them than usual make have taken on part-time or even full-time summer work and thus stayed in the workforce. That theory won’t be trackable, but it’s something I believe may be happening.

Here’s the link for the report from the Bureaus of Labor Statistics (BLS) when it comes.

HERE IT IS:

The unemployment rate rose to 5.7 percent, and nonfarm payroll employment continued to trend down in July (-51,000), the Bureau of Labor Statistics of the U.S. Department of Labor reported today. Employment continued to fall in construction, manufacturing, and several service-providing industries, while health care and mining continued to add jobs. Average hourly earnings rose by 6 cents, or 0.3 percent, over the month.

So Blah3 was half-right (sorry, couldn’t resist :–>).

Jobs Report Highlights:

- Revision to June’s original -62,000 (seasonally adjusted) — now -51,000, an improvement of 11,000.
- Revision to May’s once-revised -62,000 — now -47,000, an improvement of 15,000.
- Net change including prior-month revisions is -25,000 (-51+11+15).

- Actual job reduction in June — -1,458,000 (worst individual July result since 2001).
- Revision to June’s actual jobs added of +241,000 — up 48,000 to +289,000 (still the worst in at least 10 years).
- Revision to May’s once-revised actual jobs added of +653,000 — up 22,000 to +675,000 (also the worst in at least 10 years).
- Total change in actual jobs lost, including prior-month revisions is +1,388,000 (-1458+48+22).

Unemployment Rate Report Highlights:

- Unemployment rate (NOT seasonally adjusted) — 6.0% (was 5.7% in June, 4.9% in July 2007).

- African-American unemployment rate (seasonally adjusted) — 9.7% (was 9.2% in June, 8.1% in July 2007).
- African-American unemployment rate (NOT seasonally adjusted) — 10.9% (was 9.8% in June, 8.9% in July 2007)/

- Teenage unemployment rate (seasonally adjusted) — 20.3% (was 18.1% in June, 15.3% in July 2007).
- Teenage unemployment rate (NOT seasonally adjusted) — 21.0% (was 21.9% in June, 15.5% in July 2007).

- Total workforce (seasonally adjusted) — 154.603 million, up 213,000 (was 154.390 million in June).
- Total workforce (NOT seasonally adjusted) — 156.300 million, up 718,000 (was 155.582 million in June).

- People working (seasonally adjusted) — 145.819 million, down 72,000 (was 145.891 million in June).
- People working (NOT seasonally adjusted) — 146.867 million, up 218,000 (was 146.649 million in June).

- June change in the number of unemployed (seasonally adjusted) — up 285,000 (from 8.499 million to 8.784 million).
- June change in the number of unemployed (NOT seasonally adjusted) — up 500,000 (from 8.933 million to 9.433 million).

Comments:

  • Although it’s easy to take heart in the relatively small net change including prior-month revisions (and I will to an extent, because the press probably won’t mention it at all), this report does not paint a pretty picture.
  • I see a lot of people getting into the workforce and trying to find employment, and not getting it, particularly teens and African-Americans (maybe more teachers too, but I don’t think so, since the total increase in the not seasonally adjusted workforce in the past few months is comparable to prior years). Given anecdotal info about illegals self-deporting or having a harder time finding work at legitimate employers, it seems that employers who had been using illegals may be deciding not to replace them with other unskilled workers who might be available, perhaps largely due to the next point.
  • Since it’s summer, this is the time to make the point that the higher minimum wage passed by the current Congress may be a key cause of the way-higher (5%-plus) teen unemployment rate, and perhaps the higher African-American uemployment rates too.

Positivity: North Tonawanda man saves neighbor from burning home

Filed under: Positivity — Tom @ 6:00 am

From North Tonawanda, NY (video at link):

Updated: July 18, 2008 10:32 AM

A North Tonawanda man is being called a hero. David Dashnaw does not consider himself a hero, but his son, Jack, does. So do many others.

Lorey Schultz: Why are you proud of your dad?

North Tonawanda Resident Jack Dashnaw: “Because he saved a person, and he’s nice.”

David woke up to the smell of smoke a few days ago, and then saw his neighbor’s kitchen filled with flames. He jumped into action.

North Tonawanda Resident David Dashnaw: “I ran across to neighbor’s house, looked in to see if anyone was in there.”

Lorey Schultz: What did you see?

David Dashnaw: “I saw someone sleeping on the couch.”

When the man didn’t respond to Dave’s screams, or the smoke alarm, he broke down the front door.

Lorey Schultz: How did you get in?

David Dashnaw: “Went through the door.”

Lorey Schultz: Didn’t think twice?

David Dashnaw: “Didn’t think twice.”

Lorey Schultz: Do you feel lucky to be alive today?

David Hochulski: “Sure. Of course.”

David Hochulski says he fell asleep while cooking. He’s still overwhelmed that his neighbor, a man he never knew, risked his life to save him.

Hochulski said, “Well, not everyone would do that, so I’m glad he went into the house filled with smoke and tried to help me. It’s something you don’t have words for.”

Had the fire burned another ten to fifteen minutes, fire officials believe the entire house would have been fully engulfed in flames. They absolutely consider Jack’s dad a hero.

North Tonawanda Fire Captain David Schmidt said, “He went the extra distance to help his neighbor and investigated when he smelled smoke. Had he not done that, a tragedy could have occurred.”

Ann Engler agrees. She was called in to clean up after the fire.

Ann Engler (Fresh Start, Inc.) said, “The fact his neighbor saved his life, it’s reassuring; nice thing to hear.”

David Dashnaw said, “I did the right thing, I guess.”

David is humbled by the incident, but touched, most of all, that his son sees him as a hero.

Jack Dashnaw said, “It’s important because he saved a person, and that’s nice for other people.”

Firefighters do believe that David rescued his neighbor just in time. …..

Go here for the rest of the story.