July 3, 2015

Reuters Video Claims June Job Gains (Virtually All in Services) Were ‘Broad-Based’

The folks at Reuters issued a pretty sloppy video yesterday relating to the government’s June jobs report.

That videos described yesterday’s reported jobs gains of 223,000 as “broad-based.” That’s true only if you think having 222,000 of yeaterday’s those seasonally adjusted gains occurring in service industries, while only 1,000 were seen in goods-producing industries, is “broad-based”:


May Factory Orders ‘Scream Recession’

Filed under: Economy,Taxes & Government — Tom @ 10:04 am

From the Census Bureau:

New orders for manufactured goods in May, down nine of the last ten months, decreased $4.5 billion or 1.0 percent to $470.5 billion, the U.S. Census Bureau reported today. This followed a 0.7 percent April decrease.

Shipments, down two consecutive months, decreased 0.3 billion or 0.1 percent to $482.1 billion. This followed a virtually unchanged April decrease.

And they arguably should have come in worse on a seasonalized basis:


Readers will see that monthly results, both seasoned and unseasoned, have been coming in lower than those seen three years ago throughout 2015 thus far.

Readers will also see that a May 2015 seasonal conversion to -2.0 percent or worse could easily have been justified.

Zero Hedge, with more thoughts:

Factory Orders Scream Recession: Annual Drop Biggest Since 2008

This has never happened outside of recession. .. Year-over-year, factory orders dropped 6.3% (adjusted) but 8% non-adjusted, the most since the financial crisis. Against expectations of a 0.5% drop MoM, manufacturers saw new orders tumble 1.0% and previous months were revised dramatically lower. Factory orders has now missed 10 of the last 11 months.

Factory Orders have fallen for 9 of the last 10 months

Absent the occasional spike one sees due volatile aircraft orders, the year-over-year decline appears destined to worsen next month.

Factory orders and shipments factor into GDP.

How can these declines be so steep and projected second- through fourth-quarter GDP growth still be 2 percent to 3 percent?

July 2, 2015

June Employment Situation Summary (070215): 223K Jobs Added; 60K in Prior-Month Downward Revisions; Civilian Workforce Shrinks; Phony Unemployment Rate Drops to 5.3 Percent

Filed under: Economy,Taxes & Government — Tom @ 7:54 am


Not seasonally adjusted benchmarks: Based on reviewing past history, the economy overall needs to actuall add 650,000 jobs before seasonal adjustment, and the private sector needs to see 1.05 million jobs added. If that happens, the seasonal conversions will probably be in the neighborhood of 300,000.

The report will be here at 8:30.

HERE IT IS: And with prior-month writedowns, the news is not very good, despite the fall in the unemployment rate —

Total nonfarm payroll employment increased by 223,000 in June, and the unemployment rate declined to 5.3 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in professional and business services, health care, retail trade, financial activities, and in transportation and warehousing.

Household Survey Data

The unemployment rate declined by 0.2 percentage point to 5.3 percent in June, and the number of unemployed persons declined by 375,000 to 8.3 million.

Among the major worker groups, the unemployment rates for adult men (4.8 percent), adult women (4.8 percent), and blacks (9.5 percent) edged down in June, while the rates for teenagers (18.1 percent), whites (4.6 percent), Asians (3.8 percent), and Hispanics (6.6 percent) showed little change.

The civilian labor force declined by 432,000 in June, following an increase of similar magnitude in May. The labor force participation rate declined by 0.3 percentage point to 62.6 percent in June. The employment-population ratio, at 59.3 percent, was essentially unchanged in June and has shown little movement thus far this year.

… Establishment Survey Data

Total nonfarm payroll employment rose by 223,000 in June, compared with an average monthly gain of 250,000 over the prior 12 months. In June, job gains occurred in professional and business services, health care, retail trade, financial activities, and in transportation and warehousing.

Employment in professional and business services increased by 64,000 in June, about in line with the average monthly gain of 57,000 over the prior 12 months. In June, employment continued to trend up in temporary help services (+20,000), in architectural and engineering services (+4,000), and in computer systems design and related services (+4,000).

The change in total nonfarm payroll employment for April was revised from +221,000 to +187,000, and the change for May was revised from +280,000 to +254,000. With these revisions, employment gains in April and May combined were 60,000 lower than previously reported. Over the past 3 months, job gains have averaged 221,000 per month.

So the number of people believed to be working June was only 163,000 more than the number believed to be working in May (223K June increase minus 60K in prior adjustments), and the malaise indicators got worse.

More in a bit.

Benchmarks review:
- Overall — Benchmark was 650K, actual was 455K.
- Private Sector — Benchmark was 1.05 mlllion, actual was 893K.

These are big disappointments.

Here’s an up-to-date chart of NSA and SA numbers:


Without detailing the numbers, I think that anyone looking at June results form the previous four years and seeing how they seasonally converted will agree that the seasonally adjusted results could have, and probably should have, come in at about 175K or lower instead of the 223K seen in both metrics.

By the way, the AP anticipated before the report’s released and originally claimed it came out that it would show and did show, respectively, that the job market is “close to full health.” By about 9:15, the wire service had revised their assessment to say that it’s a “mixed picture.” I have saved the three reports, and will probably go after them in a separate column.

Other notes (data is seasonally adjusted unless otherwise indicated):

  • Today’s labor force shrinkage is bad enough. In the past four months, it’s only grown by a negligible 35K.
  • The number of people employed per the Household Survey dropped by 56K.
  • “Not in the labor force hit an all-time high of 93.6 million. The participation rate dropped the to a level last seen in 1977.
  • Full-time employment FELL by 351K. Part-time employment increased by 161K. That’s a net reduction of 190K. If you’re having trouble how that can be when total Household Survey employment fell by only 56K, join the club. Perhaps a surge in multiple job holders (+173K) explains it, but I thought that was an independent stat.
  • U-6 fully-loaded unemployment is supposedly 10.5 percent. No one can possibly believe that.
  • Virtually all of the Establishment Survey jobs pickup was in Services. Goods-producing came in with whopping 1K.
  • The temping of America continues, with 37,000 temps added in the past two months.
  • The supposed expectation for the average workweek was a 0.2-hour pickup. It was unchanged.
  • Average earnings were also unchanged.

Overall, this was a very disappointing report, with little if any indications that the six-year low-participation, low-pay malaise is lifting.

July 1, 2015

ADP June Private-Sector Jobs: 237K Jobs Added

Filed under: Economy — Tom @ 10:58 pm

Other commitments kept me from tracking ADP’s report live today.

Here is what ADP report had to say:

Private sector employment increased by 237,000 jobs from May to June according to the June ADP National Employment Report®.

… “June job numbers came in at their highest level since December 2014,” said Carlos Rodriguez, president and chief executive officer of ADP. “Small businesses continue to lead the way adding over half of the total jobs this month.”

Mark Zandi, chief economist of Moody’s Analytics, said, “The U.S. job machine remains in high gear. The current robust pace of job growth is double that needed to absorb the growth in the working age population. The only blemish in the job market is the loss of jobs in the energy sector. Most encouraging is the healthy rate of job growth among the nation’s smallest companies.”

May went from 201K to 203K, April from 165K to 179K, and March showed no change.

Would have been nice to hear Mark Zandi’s 2Q15 GDP prediction. His firm’s High Frequency GDP model is predicting 3 percent, while the Atlanta Fed is currently at 2.2 percent.

June ISM Manufacturing: 53.5 Percent, Up from 52.8 Percent in May; Seasonal Shenanigans?

Filed under: Economy — Tom @ 10:44 pm

From the Institute for Supply Management (paragraph breaks added by me):

Economic activity in the manufacturing sector expanded in June for the 30th consecutive month, and the overall economy grew for the 73rd consecutive month, say the nation’s supply executives in the latest Manufacturing ISM® Report On Business®.

The June PMI® registered 53.5 percent, an increase of 0.7 percentage point over the May reading of 52.8 percent. The New Orders Index registered 56 percent, an increase of 0.2 percentage point from the reading of 55.8 percent in May. The Production Index registered 54 percent, 0.5 percentage point below the May reading of 54.5 percent.

The Employment Index registered 55.5 percent, 3.8 percentage points above the May reading of 51.7 percent, reflecting growing employment levels from May at a faster rate. Inventories of raw materials registered 53 percent, an increase of 1.5 percentage points from the May reading of 51.5 percent.

The Prices Index registered 49.5 percent, the same reading as in May, indicating lower raw materials prices for the eighth consecutive month. Comments from the panel indicate mostly stable to improving business conditions, with the notable exception relating to the oil and gas markets. Also noted is the negative effect on egg prices and availability due to the avian flu outbreak.

Of the 18 manufacturing industries, 11 are reporting growth in June …

Backlog of orders tanked into contraction going from 53.5 percent in May to 47.0 percent in June.

The May report had 14 industries growing. The April report had 15. So in both May and June, the ISM index went up while the number of industries growing went down from 15 to this month’s 11. Hmm.

Zero Hedge is claiming that there’s seasonal fiddling.

Even if they’re wrong about that, ISM has stayed in expansion (i.e. about 50 percent) even as the Fed’s industrial production report has shown manufacturing declines in four of the past six months netting out to -0.8 percent during that period. In other words, it’s not possible to claim that ISM’s results reflect what’s really happening, which is supposed to be the point of the report.

June 30, 2015

NY Times Wonders How Trillions Can Be ‘Spent’ But ‘Crises Like Greece Persist’

The current headline at a June 29 New York Times story by Peter Eavis, also appearing on the front page of today’s print edition, is “Loads of Debt: A Global Ailment With Few Cures.”

But the last portion of the story’s web address is “… trillions-spent-but-crises-like-greeces-persist.html.” That’s because the original headline, the one used at the Times’s Twitter account — was “Trillions Spent But Crises Like Greece Persist.” Of course without admitting it, Eavis’s writeup is an ode to the worldwide failure of Keynesian economics — a term which naturally never appears in any form — and the closed minds of those who don’t understand why shoveling vast sums of money created out of thin air into the financial system is only marginally helpful in the short-term, and serious harmful over the long-term.


June 29, 2015

AP Writer Dodges Own Question About the State of China’s Slowing Economy

The world’s financial markets had a terrible Monday.

The debt crisis in Greece (population: 11 million) has been dominating the headlines and the press’s attention, while serious deterioration in China (population: 1.36 billion) is getting short shrift. It isn’t just that the mainland Chinese stock market has broken the bear-market decline threshold of 20 percent in less than three weeks, dropping 21,5 percent from its June 12 peak. Its underlying economy, to the extent that such things can be ascertained in an information-controlled and news-manipulated society, appears to be in serious trouble. Associated Press reporter Ken Sweet, in a Friday Q&A writeup, emulated the worst tendencies of politicians. He posed a question about China’s economy, “answered” it with a complete dodge, and pretended that its economy hasn’t started slowing yet (bolds are mine throughout this post):


June 27, 2015

Press Ignores Sheldon Whitehouse’s Call For DOJ to Sue ‘Vast’ Global Warming ‘Denial Apparatus”

While the press looks to twist even the most innocuous statements made by Republicans and conservatives into something scandalous or outrageous (e.g., Mitt Romney’s “binders full of women“), they routinely ignore intemperate remarks by leftist politicians and activists. If known, they would likely damage the credibility and public perception of those making such statements. Of course, the left-dominated media can’t abide by that. So they censor it.

One recent example involves Rhode Island Senator Sheldon Whitehouse. Despite the unexplained and unexpected 18-year pause in global warming, the senator is convinced that the world as we know it will end without draconian measures to reduce carbon pollution and keep the earth from turning into a ball of fire. One of the strategies on his wish list is suing climate skeptics into poverty and silence.


June 26, 2015

Dear NY Times: Who Has Been in Charge All This Time? After 8 Years of ‘Financial Downturn,’ Far More Americans Delay Major Life Events

There may no better illustration of how much harm the economy has inflicted on the American people during the Obama era than a March 2015 Harris survey commissioned by American Institute of Certified Public Accountants. The AICPA’s Thursday press release reported that “a majority of American adults (51 percent) have delayed at least one important life decision in the last year due to financial reasons … an increase of 20 percentage points from a similar survey conducted in 2007.”

Covering the survey’s results, Ann Carrns at the New York Times, in an item carried at CNBC (also found at the Times’s web site), waited seven paragraphs to note a particularly damning statistic about a situation Obamacare advocates like to claim has already been solved.


June 25, 2015

EPA Chief: Climate Skeptics Are Not ‘Normal People’; Press Snoozes

Though such instances are quite rare, especially from conservative and Republican office-holding politicians and bureaucrats, we’ve been told time and again by the left that it’s people on the right who demonize and dehumanize their opponents.

Well, I don’t recall George W. Bush, anyone in his administration, or any Republican congressman or senator serving at the time of his tax cuts or during the Iraq War characterizing their political opposition as not being “normal people.” (Considering the out-of-control conduct of and statements made by many opponents, the temptation to do so must have been nearly overwhelming.) Readers can be sure that if they had, outfits like the Hill and the Assocated Press would have reported it. So why did those two news organizations ignore what they heard from EPA head Gina McCarthy at a White House climate change summit earlier this week?


AP Treats Second-Quarter Economic ‘Rebound’ As a Virtual Certainty, Ignores Contrary Data

Yesterday, the government revised the economy’s first-quarter contraction from the annualized 0.7 percent it reported in May to 0.2 percent.

In covering that news, the Associated Press’s Christopher Rugaber spent most of his report speculating about the second quarter’s impending “rebound” as if its existence is absolutely certain, citing only the items which would cause readers to believe that’s the case. There are several reasons to be quite concerned about the second quarter and the general direction of the economy — even if some of them are somehow not yet showing up in the gross domestic product figures.


Initial Unemployment Claims (062515): 271K SA; Raw Claims (263K) 14 Percent Below Same Week Last Year

Filed under: Economy,Taxes & Government — Tom @ 10:00 am

From the Department of Labor:


In the week ending June 20, the advance figure for seasonally adjusted initial claims was 271,000, an increase of 3,000 from the previous week’s revised level. The previous week’s level was revised up by 1,000 from 267,000 to 268,000. The 4-week moving average was 273,750, a decrease of 3,250 from the previous week’s revised average. The previous week’s average was revised up by 250 from 276,750 to 277,000.


The advance number of actual initial claims under state programs, unadjusted, totaled 263,221 in the week ending June 20, an increase of 4,457 (or 1.7 percent) from the previous week. The seasonal factors had expected an increase of 1,607 (or 0.6 percent) from the previous week. There were 305,029 initial claims in the comparable week in 2014.

The seasonal adjustment factors were virtually identical (97.2 this year, 97.5 for same week last year).

This is another quite acceptable result.

Politico Columnist: Putting a Woman on the $10 Bill ‘Isn’t Worthy’

One of the latest in a seemingly endless stream of missives from the perpetually aggrieved comes from Ruth Graham at the Politico, which seems to have become an especially fertile repository for such ridiculous items.

Mr. Graham is completely unimpressed that Obama administration Treasury Secretary Jack Lew has announced that the image of a famous woman to be named later will soon grace the $10 bill. In fact, the New Hampshire journalist essentially considers the move an insult.


June 24, 2015

Bigoted Vox Writer Smears the South

Vox’s David Roberts, who describes himself at his “drvox” Twitter page as a “Seattleite transplanted from Tennessee,” clearly does not have a lot of love for his region of origin.

Tuesday afternoon, in the wake of Dylann Roof’s racially-motivated massacre in Charleston, South Carolina, Roberts tweeted his belief that “The American South has always been the most barbaric, backward region in any developed democracy.” He then asked, “Can we admit that now?” No we can’t, David, and we won’t.


1Q15 GDP, Third Reading: Annualized Contraction of -0.2 Percent, a 0.5 Percent Improvement Over Previous Estimate

Filed under: Economy,Taxes & Government — Tom @ 8:28 am

Predictions are for a move to a 0.2 percent annualized contraction from the 0.7 percent reported a month ago.

I think it should be larger, but whether it gets reflected is another matter.

The report will be here at 8:30.

HERE IT IS: Predictions were dead-on (full release with tables here) —

Real gross domestic product — the value of the production of goods and services in the United States, adjusted for price changes — decreased at an annual rate of 0.2 percent in the first quarter of 2015, according to the “third” estimate released by the Bureau of Economic Analysis. In the fourth quarter, real GDP increased 2.2 percent.

The GDP estimate released today is based on more complete source data than were available for the “second” estimate issued last month. In the second estimate, the decrease in real GDP was 0.7 percent. With the third estimate for the first quarter, exports decreased less than previously estimated, and personal consumption expenditures (PCE) and imports increased more (see “Revisions” on page 3).

The decrease in real GDP in the first quarter primarily reflected negative contributions from exports, nonresidential fixed investment, and state and local government spending that were partly offset by positive contributions from PCE, private inventory investment, and residential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased.

I’ll have a comparison chart up shortly.

Here it is:


The two most important items are:

  • Health care, which is likely a major contributor because of increased out-of-pocket costs consumers are having to swallow (in Obamacare and non-Obamacare plans). Trouble is, this is the component no one really feels enhances their standard of living.
  • Imports, which as seen above, went from being a minor to a huge detriment to GDP.

A runner-up is inventories, which increased by more than was estimated a month ago. My view would be that any increase here is going to come off in the second quarter, and then some.

There certainly isn’t any fundamental strength evident in today’s numbers.

The Atlanta Fed’s estimate for the second quarter is currently an annualized 2.1 percent, a figure which has moved up by about 1.3 points during the past three weeks. The estimate as of June 23 appears to take existing home sales data into account but doesn’t mention yesterday’s weak durable goods numbers.

July’s GDP report is going to include revisions to data going back several years, incluing this quarter. It will be quite interesting, especially in light of the spurious claims about “residual seasonality,” whether today’s figure moves back into positive territory, or gets more negative to in my opinion more accurately reflect horribly weak underlying first-quarter data.