October 2, 2015

Not News at AP: 10 Straight Months of Declines in Factory Orders and Shipments

Although it was very disappointing, the September Employment Situation Summary, which told us that the economy added only 142,000 seasonally adjusted jobs as hundreds of thousands of Americans withdrew from the labor force, was not the worst economy-related news of the day.

That dubious honor belongs to the Census Bureau’s Factory Orders report. At least the employment report showed more people holding payroll jobs and overall August payroll employment 2 percent greater than a year ago. By contrast the Census report continued a nearly year-long pattern of declining year-over-year orders and shipments accompanied by still-bloated inventories. As anyone could have predicted, Martin Crutsinger at the Associated Press completely ignored these alarming trends.

(more…)

Random Question: Is The Government’s ‘Birth/Death Model’ Padding the Jobs Numbers?

Filed under: Economy,Taxes & Government — Tom @ 4:14 pm

Every month, the government attempts to estimate the net result of jobs added at companies they haven’t found yet (because they’re new or still hiding out there somewhere) and companies that have gone out of business.

The result is the Birth/Death Model adjustment.

But here’s the thing.

The government always presents estimates by industry and then tells us how many not seasonally adjusted jobs were added or lost overall.

But the Birth/Death Model only applies to the private sector.

If we recognize that reality, the Birth/Death model gave us 34,000 of the 525,000 not seasonally adjusted jobs lost in the private sector in September.

It gave us 111,000 of the not seasonally adjusted 24,000 jobs added in August (after today’s downward revision).

You read that right.

Without the Birth/Death Model estimate, August would now be showing a net loss on the ground of 87,000 jobs.

If, as I suspect, the Birth/Death model is overly optimistic these days — it makes sense that it would be, given the continued year-over-year declines in factory orders and shipments this year and even late last year — we’re going eventually see even more downward adjustments to the jobs numbers as the annual comprehensive revisions roll in.

Factory Orders: Yet Another Month (10th in a Row) of Year-Over-Year Declines

Filed under: Economy,Taxes & Government — Tom @ 10:20 am

From the Census Bureau:

New orders for manufactured goods in August, down following two consecutive monthly increases, decreased $8.2 billion or 1.7 percent to $473.0 billion, the U.S. Census Bureau reported today. This followed a 0.2 percent July increase.

Shipments, down four of the last five months, decreased $3.2 billion or 0.7 percent to $480.1 billion. This followed a 0.2 percent July decrease.

That’s the 10th month in a row (previous nine are seen at link).

Zero Hedge says it’s the longest such negative streak outside of a recession.

All of this once again begs the question of how GDP can possibly continue growing.

The September Employment Situation Summary (100215): OUCH — Only 142K SA Jobs Added; Prior Months Revised Down 59K; Unemployment Rate Still 5.1 Pct.; Private Sector’s Worst Sept. Since ’09

Filed under: Economy,Taxes & Government — Tom @ 8:27 am

Predictions:

  • Yahoo’s Business Calendar expects 200,000 payroll jobs added and the unemployment rate staying at 5.1 percent per Briefing.com.
  • “Markets” at Yahoo’s Business Calendar has 205,000 jobs added and no change in the unemployment rate.
  • An Associated Press report on initial unemployment claims yesterday had a prediction of +206K for jobs and the unemployment rate holding.

August adjustment: Everyone seems to assume, based on revisions made in previous years, that August’s number is going to get revised up by 30,000 to 50,000. As I noted last month, even that writeup isn’t going to mean that August was strong, based on how weak the raw numbers were.

Not seasonally adjusted benchmarks for September: Before seasonal adjustment, the economy will need to have added 750,000 jobs to nonfarm payrolls and to have lost just 200,000 jobs in the private sector.

SAandNSApayrolls0105to0815preadj

September (actually the period between mid-August and mid-September, based on the timing of the underlying surveys) is a period when a lot of government workers in education return to their jobs after having the summer off, while a lot of private-sector workers end their seasonal employment.

The report will be here at 8:30.

HERE IT IS (full HTML link with tables) This one’s going to leave a mark. August got revised DOWN, not up. September is weak, and the malaise indicators got worse

Total nonfarm payroll employment increased by 142,000 in September, and the unemployment rate was unchanged at 5.1 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in health care and information, while mining employment fell.

Household Survey Data

In September, the unemployment rate held at 5.1 percent, and the number of unemployed persons (7.9 million) changed little. Over the year, the unemployment rate and the number of unemployed persons were down by 0.8 percentage point and
1.3 million, respectively.

Among the major worker groups, the unemployment rates for adult men (4.7 percent), adult women (4.6 percent), teenagers (16.3 percent), whites (4.4 percent), blacks (9.2 percent), Asians (3.6 percent), and Hispanics (6.4 percent) showed little or no change in September.

The civilian labor force participation rate declined to 62.4 percent in September; the rate had been 62.6 percent for the prior 3 months. The employment-population ratio edged down to 59.2 percent in September, after showing little movement for the first 8 months of the year.

Establishment Survey Data

Total nonfarm payroll employment increased by 142,000 in September. Thus far in 2015, job growth has averaged 198,000 per month, compared with an average monthly gain of 260,000 in 2014. In September, job gains occurred in health care and information, while employment in mining continued to decline.

Health care added 34,000 jobs in September, in line with the average increase of 38,000 jobs per month over the prior 12 months. Hospitals accounted for 16,000 of the jobs gained in September, and employment in ambulatory health care services continued to trend up (+13,000).

Employment in information increased by 12,000 in September and has increased by 44,000 over the year.

Employment in professional and business services continued to trend up in September (+31,000). Job growth has averaged 45,000 per month thus far in 2015, compared with an average monthly gain of 59,000 in 2014. In September, job gains occurred in computer systems design and related services (+7,000) and in legal services (+5,000).

… Employment in food services and drinking places continued on an upward trend in September (+21,000). Over the year, this industry has added 349,000 jobs.

Employment in mining continued to decline in September (-10,000), with losses concentrated in support activities for mining (-7,000). Mining employment has declined by 102,000 since reaching a peak in December 2014.

The average workweek for all employees on private nonfarm payrolls declined by 0.1 hour to 34.5 hours in September. The manufacturing workweek decreased by 0.2 hour to 40.6 hours, and factory overtime declined by 0.2 hour to 3.1 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls decreased by 0.1 hour to 33.6 hours.

In September, average hourly earnings for all employees on private nonfarm payrolls, at $25.09, changed little (-1 cent), following a 9-cent gain in August. Hourly earnings have risen by 2.2 percent over the year. Average hourly earnings of private-sector production and nonsupervisory employees were unchanged at $21.08 in September.

The change in total nonfarm payroll employment for July was revised from +245,000 to +223,000, and the change for August was revised from +173,000 to +136,000. With these revisions, employment gains in July and August combined were 59,000 less than previously reported. Over the past 3 months, job gains have averaged 167,000 per month.

The latest figures indicate that about 83,000 more people were working in September than were working in August (142K minus 59K in prior-month revisions).

Not Seasonally Adjusted Results:

  • Overall, only 558,000 jobs were added (corrected from a previous figure) compared to the 750,000 needed. As seen below, that’s the worst September performance since 2010. In the context of previous years, the overall seasonal adjustment looks reasonable.
  • The private sector was horrible. 525,000 jobs were lost compared to the benchmark of 200,000 losses. As seen below that’s the worst September by miles since 2009. In the context of prior years, one could easily argue that the seasonal adjusted result should have come in at about 20,000-40,000, or 80,000-100,000 lower than the reported 118,000. (Update: Upon further review, one could argue that the seasonally adjusted private-sector figure should have been zero).

Here are the ugly adjusted tables after incorporating today’s results:

SAandNSApayrolls0105to0815postadj

The private sector results are indeed the “payroll disaster” Zero Hedge is describing. Note that August’s already poor 71K dropped to 24K.

MORE IN A BIT …

UPDATE (data is seasonally adjusted unless otherwise indicated):

  • The Household Survey shows 236,000 jobs lost in September, and (not kidding) only 5,000 gained since May.
  • “Not in labor force” quantum-leaped by almost 600,000 to 94.61 million.
  • The last time we saw a labor force participation rate of 62.4 percent was October of 1977.
  • Manufacturing employment is down by 27,000 in the past two months.
  • Full-time employment fell by 185,000 to 121.839 million, retreating to a level just below the pre-recession peak of 121.875 million in November 2007 after slightly exceeding it last month. Part-time employment increased by 53,000.
  • Average weekly earnings fell by $2.85 to $865.61. That’s far more telling than the 1 cent drop in the average hourly rate.
  • Is there anyone who really believes that only 7.9 million Americans would be reported as unemployed if BLS was defining it exactly the same way as it was 10 years ago?

I would think that the people who have been so sure of a Fed rate hike aren’t as sure now.

More fundamentally, I would argue that the employment results are finally catching up to the awful orders, production, and shipments figures we’ve seen in hard-number Census Bureau, Federal Reserve and other data this entire calendar year. I would expect that people who believe that the past two months have been aberrations and who expect a return to 200K+/month payroll job adds as far as the eye can see — I’m talking to you, Mark Zandi at Moody’s/ADP — are going to be sorely disappointed.

NewsBusted (092915)

Filed under: NewsBusted — Tom @ 7:15 am

Here we go:

Topics:
– Boehner Resigns
– China’s Xi Jinping
– Pope Francis
– ISIS
– Joe Biden
– Bernie Sanders
– Scott Walker
– Caitlyn Jenner

Best Lines:

  • “House Speaker Boehner announced his resignation. Boehner realized that no matter how hard he tried, it was virtually impossible for him to cave into President Obama any more than he already has.”
  • “President Obama hosted a state dinner for Chinese president Xi Jinping. And China’s president brought good news to the White House: At the moment, China has no plans to foreclose.”
  • “Last week, Pope Francis addressed a joint session of Congress, where he denounced ISIS. Sadly, ISIS fears the Pope more than they fear President Obama.”
  • “As you’ve probably heard, Dr. Ben Carson said he wouldn’t support electing a Muslim president. But according to a recent poll, 29 percent of Americans already think it’s too late.”

Friday Off-Topic (Moderated) Open Thread (100215)

Filed under: Lucid Links — Tom @ 6:05 am

This open thread is meant for commenters to post on items either briefly noted below (if any) or otherwise not covered at this blog. Rules are here.

Positivity: Pope Francis lauds Archbishop Chaput’s ‘great love for the family’

Filed under: Positivity — Tom @ 6:00 am

From Vatican City:

Sep 30, 2015 / 11:21 am

Pope Francis reviewed his recent trip to Cuba and the United States during his General Audience on Wednesday, calling the World Meeting of Families in Philadelphia the “culmination” of his apostolic visit.

“I wish to convey my fraternal and warm thanks to Archbishop Chaput of Philadelphia, for his commitment, his piety, his enthusiasm, and his great love for the family in the organization of this event,” the Pope said Sept. 30 in St. Peter’s Square.

“At closer inspection, it is no accident, but rather providential that the message, indeed, the witness of the World Meeting of Families came at this moment from the United States of America, that is, the country that during the last century reached the highest level of economic and technological development, without renouncing its religious roots. Now these same roots are asking to be replanted in the family, to rethink and change the model of development, for the good of the entire human family.”

He noted that his trip to Cuba and the United States was occassioned by the World Meeting of Families, and was expanded from there to include the United Nations and Cuba. He expressed his thanks to Cuban president Raul Castro, United States president Barack Obama, and United Nations secretary general Ban Ki-moon for their welcome. …

Go here for the rest of the story.