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Jobs Market Recovery Now Underway?
Submitted by Leo Kolivakis, publisher of Pension Pulse.
Tavia Grant of the Globe and Mail asks When will employers start hiring?:
It's a key question for the economy this year as the recovery enfolds: When will employers start hiring again?
Though job losses have eased, so far there are few sign employers are confident enough to wade into the hiring pool again.
Insights into the jobs market will come Friday, when Statistics Canada
releases its labour force survey for January. Economists polled by
Bloomberg News expect employers added a modest 15,000 positions last
month. It's a far cry from the same month last year, when employment in
Canada plunged by 130,000 – the most on record.
The jobless rate is seen at 8.5 per cent from a revised 8.4 per cent in December.
“The
recovery in the labour market itself has not been smooth, as it has
seesawed between job growth and job losses on a fairly regular basis,”
said Millan Mulraine, economics strategist at Toronto-Dominion Bank,
who expects the labour market will stabilize in the coming months.
Canada's
labour market slumped at the end of last year, with revised data
showing the country lost 28,300 jobs in the month, rather than the
2,600 Statscan originally reported. The jobless rate currently stands
at 8.4 per cent, a notch lower than the 8.5 per cent the agency first
reported.
Statscan adjusts its labour
numbers every January to account for seasonal hiccups in the data. This
year's revisions were more extensive, going back several decades,
because the agency adopted a new model to make its seasonal adjustments.
Despite the revisions, the overall picture remains the same, said Geoff Bowlby, Statscan's director of labour statistics.
“The
big picture hasn't changed – the big story of employment falling
dramatically from its peak of October of 2008 to some time just before
the summer, and then being more stable after that. That trend hasn't
changed,” he said in an interview.
Statscan's labour force
survey is based on responses from 57,000 households, making it one of
the most extensive in the world, he said. It's about the same sample
size as that of the United States, though Canada's population is about
a tenth of its neighbour's.
Canada's jobs survey is well
regarded in terms of both accuracy and comprehensiveness, said Doug
Hyatt, economics professor at Rotman School of Managment.He outlines several reasons why the jobless rate is likely to remain stubbornly high this year.
“One of the challenges as you're coming out of a recession is that the unemployment rate
stays high, or gets higher even if we're creating jobs, because all of
those people who gave up looking for work start to come back again,” he
said. As well, “typically, employers say, ‘I could hire right now --
but I'm just not confident enough about my order book. So I'm going to
work my existing staff overtime.'”
The recession has killed about 323,000 jobs so far.
Recent
surveys on hiring suggest companies are still cautious. Nearly
three-quarters, or 71 per cent, of smaller businesses don't see a
change in their full-time employment levels in the coming months.
Fourteen per cent plan to increase their head count while 15 per cent
intend to decrease staffing, according to the Canadian Federation of
Independent Business survey released this week.
A separate
Towers Watson survey conducted last month showed four in 10 employers
are still planning job cuts, while 87 per cent plan to hire – meaning
some plan to both hire and fire this year.
Statscan will release
its survey at 7 a.m. (ET) on Friday. The U.S. Bureau of Labour
Statistics also releases its non-farm payrolls numbers Friday, at 8:30
a.m. (ET). Economists expect 15,000 positions were added last month,
with the jobless rate staying near a three-decade high of 10 per cent.
The agency will also make its annual revision to its payroll data.
There
is no doubt that employers are hesitant to hire, especially coming out
of a severe financial recession. But let there be no doubt that North
American (and even UK) labor markets will experience significant job growth in Q1 & Q2 2010.
While
everyone was scared to death following the stock market selloff on
Thursday (hope you were buying that dip), hardly anyone paid attention
to Cisco reporting dramatic sales growth and plans to hire in coming year.
And
it isn't just Cisco that plans to hire more workers. Business
investment is picking up and hiring is happening across all sectors so
don't be surprised to see some upside surprises on Friday morning.
Stéfane Marion, Chief Economist and Strategist at the National Bank of
Canada asks, U.S.: Upside surprise for payroll numbers?:
As
we look ahead to this Friday’s all-important payroll jobs report, the
latest data are encouraging. The employment component of the
just-released ISM report on manufacturing rose to its highest level in
four years in January. Also, we note that the Conference Board’s
Help-Wanted Online data series surged by 382,000 in January.
This
was the largest increase since the inception of the measure in 2005 and
brings the cumulative increase in online vacancies to 750,000 in the
last three months.
As today’s Hot Chart shows (click
on image above), online vacancies rose above the 4 million mark for the
first time since November 2008. In light of these developments, we
remain comfortable with our estimate of 100,000 net new payroll jobs in
January.
Consensus is expecting US payrolls
to rise by 15,000 in January. I wouldn't be surprised if the actual
print comes in at ten times that amount. Of course, this isn't a V-shaped recovery, but it is encouraging nonetheless, and I expect a strong reaction from the bond, stock, commodity and currency markets.
So
while everyone was worried about Thursday's market selloff, I expect
Friday will be a different day. The bears were growling on Thursday but
the bulls will come charging back on Friday. Going forward, markets
will become a lot more interesting - and a lot more dangerous.
»
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Leo, We are in a period where all the numbers dissapoint. We got good headline numbers for
GDP and they shoot the markets.
We lost 1mm jobs more than we thought and the monthly jobs losses continue. There is no good news on employment in this report.
You are being dangerously optomistic at a time when all is not well and we just had a 60% upside correction. Careful for your wallet.
Bruce--a trader's worse enemy is pride. He surely knows what you are saying.
A trader's worst enemy is conviction and leverage.
well said bruce!
Leo, For the last 20+ years the stock market has become the barometer for consumer confidence/spending and eventually employment. yet again the consumer was looking like he was gonna be fooled but the rally was overdone and instead of opening their wallets sheeple started emptying their equity holdings. The latest sell-off does little towards consumer confidence. You may be right - there will be a temporary employment upswing that will be shot down right away by the collapsing stock market.
It is a sad day when CNBC does a better job than Zerohedge
http://www.cnbc.com/id/35254420
A few things from a former bear:
#1. Earnings have absolutely demolished my expectations from 3-6 months ago. This is incredible, especially in light of the fact that jobs have been revised down 1.2 million. So conditions were worse than previously thought, and good companies still thrived!
#2. The result of this? Good companies will continue to thrive. People are still saving more, and spending less. There will be real winners and losers, and picking the winners will be come increasingly more important. The workforce will demand more skilled workers as companies improve efficiencies.
#3. Tim Geithner has guaranteed that there will not be another financial crisis. The U.S. gov't has already taken illegal steps (pointed out on this site) to save the system. They'll continue to do it. Society will be just fine. Humans haven't all of a sudden forgotten how to produce food or provide water... There will be countless accounting shenanigans going forward, but I contend that it really just doesn't matter. The lowest standards of living in the developed world are much higher than they were just 100 years ago, which is why continuing to provide a sufficient safety net is, and should be, an ongoing priority.
"#3. Tim Geithner has guaranteed that there will not be another financial crisis."
http://5minforecast.agorafinancial.com/the-next-wave-of-the-housing-cris...
HA HA HA HA HA HA HA HA HA
I'll complete the trifecta-- your point #3 has serious limitations. Timmy can "guarantee" all he wants about avoid another financial crisis-- but if there there isn't demand to finance those mounting public debts, larger (deflationary) forces simply takeover. It's not as if Timmy and his financially sophisicated partners at the Treserve saw all this coming the first time around.
They'll likely whiff on the second time around as well.
It's a far cry from "producing food and water" and "accounting shenanigans" to the S&P 500 being worth 1200. What you're talking about is a sort of just-above-subsistence living standard with a healthy dose of corrupt accounting on the side. Are current valuations reflective of that, when we're in the upper reaches of long-term valuation metrics? I'd contend that unless the "greater fool" theory is actually going to work this time, the answer is no.
I'm not sure if the March lows will get broken, but they should get a good retest.
Your point #1 has a false premise as well...
Earnings demolished expectations... jobs revised down 1.2 million
And a fact of my own... NO TOP LINE GROWTH.
Revenues based on already manufactured inventory with weaker sales MINUS labor force cuts EQUALS profits.
(That overpriced Accounting education sure came in handy!)
HELL YEAH! Earnings are dope, yo!
Thank you MB. Point #1 is fiction. Your analysis of the earnings numbers are fact.
Now is a great time to buy things that you have been putting off as long as you pay cash.
Your point #2 is completely incorrect. People were saving more briefly but the savings rate is falling again. Visa just reported higher revenue. Why? Because people are desperately trying to get by on their credit cards. Also, the demand for skilled workers will continue to decline in this country due to automation and outsourcing. Modern factories need relatively few workers, just enough to maintain the robots really. And Tim Geithner's guarentees? Puh-lease. If the PTB really could direct things to their desires we'd all be rich wouldn't we.
A perspective to share. I'm here in a SE TN county of 100,000 with lower middle class demographics. Primary base is industrial. We are typically off the radar, seldom influenced by upswings or downswings.
The other day I learned that our industrial temp staffing agency has an increasing client base that REQUIRES resumes for temp candidates. Mind you, these are $8/hour positions, not $25/hour positions. And temp job openings are far exceeded by candidate supply. Lots of people still out of work, and we're one of the bright spots in the country.
The consumer drives the economy, and they're spending less and less. You can try to be optimistic about a recovery, but until people get back to work and earn a better wage, and until our tax burden is lowered to allow more capital to flow into the market, vital consumer dollars will not flow into the economy. If no one is buying, no one is selling. Ergo, no recovery.
Nothing like a little reality check.
Weathermen should look out the window
more often, too. The Fed/Treasury had over
450 economic staff on the payroll, half of them
PhDs, and AG/BB/HP/TG still say they missed
2008.
PS They're still hiring on the float...
http://www.federalreserve.gov/research/
nice call Leo. keep buying those dips.
GS...:
Thanks for the comment. I was wondering why it got hit as hard as it did.
I am willing to bet they(GS) are playing it. A hard dump to shake out the week holders with derivative acqusition and heavy buying later to ramp it up.
Looking at GLD a My "straws in the wind" (personal preferred divergences to support RSI) indicates that while it was well overbought back in Nov/Dec, it is starting to be oversold now. IMO, it is approaching a buy, perhaps within a week, maybe 2.
Buddy, you can bet your ass I'm going to keep buying those dips! Hope the hedgies bring solars down big time so I can load up some more at attractive prices (Yeah, I know, the traders will shrug their heads and roll their eyes on averaging down but who cares).
I'm going to keep buying those dips
------------------
you can not, you already run out of money long long time ago
Hey Leo,
Can you tell us where you bought your money printing machine so we can by all the dips also and feel as relaxed as you seem to be when losing lots of cash. lol.
Leo, solar panels are a luxury that you might consider installing if times are fat. In a deflationary/debt-crisis environment, which we are in right now, the demand for solars in the private sector is going to plummet. Solars might be a buy after they hit bottom and when the worst of the downturn is behind us, but we're (in my opinion) only in the 3rd inning right now. Good luck buying on the dips ala Rambus in 2000.
Leo on the long term you will wish you went uranium / nuclear instead of solar, but you know I love you anyway babe.
ditto with U. high cost as a main source, for central station electricity using solar. just my 2¢
It's official. I'm nauseous.
The market can go down longer than you can
afford to average down my friend. Solars?
You've got to be kidding. Surely you jest.
How about some economics for a change? Best...
It's called CONVICTION, something you obviously lack...
Asylums are filled with people that have deep conviction.
And many of them have been convicted.
General Custer had conviction.....
... as did the Indians who surrounded him.
The problem with "conviction" is that can get you: (a) broke; (b) killed; or (c) thrown in jail.
Hopefully, as all this plays out, we'll see a lot more of (c) as we sort out this moral hazard crisis.
I interviewed with a solar company recently, who had no accounts receivable department at ALL.
They anticipate growing by selling to commercial homebuilders.
Good thing there are so many homes being built...
Actually I think there is a good market for retrofitting existing homes with alternative energy sources.
Leo, convictions can get you killed and render you insolvent. When you have an idea or concept about a certain territory, and the territory either changes or in reality is different from your idea, it is not the territory that will or must change.
Stay prudent friend.
the other day while picking up the mail at the post office i heard a woman comment that she had been let go by BNY Mellon, her strategy was to use up all her unemployment then look for a job, answer me this leo (who i believe is more of a conspiracy theorist than project mayhem) for any kind of correction to happen and employers to begin hiring again, wouldn't workers have to been willing to take a pay cut? If public and private debts are so large and velocity of goods going out of companies doors so slow that they had to fire people in the first place, logic would state that any incoming workers would have to be willing to take a pay cut. What i've seen on the street is that most plan on just milking the unemployment or they will not get off it because they can't find a job with a wage they believe is fair, so how is employment picking up? Yes you cite that cisco is going to hire, but i'm sure you can find at a ratio of 100/1 more articles of companies letting go then hiring.
BTW- a lot of business owners I know will not hire anyone until Obama gets his act together. Others will be dropping people if some of his nutso ideas look like they will get thru and affect employers.
Folks are plain skittish. Its hard to plan when Obama might make some off hnd comment that clobbers our sector, or decides all businesses must supply employees a years worth of TP on their anniversary date, and so forth.
Keep the socio-political factors in mind.
Also Leo, I think you're wrong about the 1Q and 2Q and even if you are correct its only a numbers game. People in the know I do business with say we tank huge 3 or 4Q.
I hope you're correct but I think you might be temporarily correct at best.
A cat, having once sat on a hot stove,
will not sit on a cold one either.
After Sept 2008 through March 2009,
doubt too many small business people
staying around for more Animal Farm
0DC takeovers of the economy.
Thread of history shows numerous deaths
from central planning. Just when we think we
are smarter than anyone else and the
markets, Scott Brown is elected...
http://www.jubileeprosperity.com/
Damn, Glenn Beck couldn't have said it any better!
There's talk of some sort of tax credit for hiring new workers.
What percentage of employers that can hold off hiring will hold off hiring until they hear what sort of a tax credit they might get (or will wait to hire until the tax credit kicks in).
On the one hand it's stupid for the government to pronounce that things like that might be coming, because obviously it will stop some people hiring sooner instead of later. On the other hand, like it's not a political ploy. This way when anyone that held off until the tax credit came in suddenly starts hiring the boners can say "Look at all the hiring that has suddenly started thanks to our wonderful policy!"
Nobody is waiting to hire until they hear about some tax credit. Nobody. Companies hire because they need somebody to get some stuff done. Period. If the value of the stuff that the person would get done is worth more than the cost of hiring the person, they'll hire the person. A credit for the employer share of Social Security would not tip the balance on that decision. If they can make more money by hiring somebody to get more work done, they'll do it. Nobody is in a production squeeze right now, unable to satisfy orders because they can't afford to hire labor. So talk of tax credits to the rescue is silly. Demand to the rescue would do it, but I ain't seen him in a while.
Ned that tax credit is SHIT relative to the investment an employer makes in the employee in terms of payroll taxes, and mandatory workers comp (in my state). I think is would be 5K. What the fuck would I do with that--its pretty much a nothingburger.
Now if Obama would declare a holiday on all payroll tax, that MIGHT be different. That credit is useless, especially when Obama can just shank me some other worse way half a year later.
Amen, Mr.Mo--people (non business owners) are all doing happy dance and I'm like, 5K? What bullshit. Its almost an insult. Like offering me a pen or a T-shirt if I apply for a credit card which will screw me for life if I use it.
No thanks.
you only hire when things pick up, they are getting softer from an autoparts perspective, which is bad, my dad said in the recessions in the 80's things actually got better. It's been a slow steady slowing grind since 08 here. Why would anyone hire to get a 5,000 dollar credit just to have the person sit around and do nothing?
Nope, don't believe this for a second.
Cisco is a joke. You know it too Leo, all they are doing is the same shell games that will blow up in their face like the countless companies that pull this off balance sheet garbage.
COOKING THE BOOKS SURE MAKES A GOOD BBQ, but little money.
Selectively ignoring the obvious makes your credibility look like a neo-con.
but payrolls were unchanged, falling by 20,000 in January.
-20,000 = unchanged? ESSENTIALLY unchanged is what was written in the release.
Only matters if you are one of the 20,000 I guess.
Some not so bright spots:
(1) October - December payrolls revised downward by 102,000
(2) Average hours worked up only 0.1
My call for job growth in Q1 & Q2 still stands. There were so many revisions to this employment report that I don't know how they will revise it going forward. But you can't have all the leading indicators soaring for months and employment, which always lags, be in the doldrums forever.
Leo:
My sense is that here, in Detroit, there is some hiring of qualified people, technical skills are in demand. But, for the less qualified and small business, the income rates are down. People are accepting less in order to keep producing some income.
A statistic income per capita in the work place will probably have to wait on income tax data but that should tell the story.
Leo, on the Cisco report, I think you should check out Denninger's research. It is rather telling. Bad luck on the jobs call, such is life. Keep up the good work on the pension side.
Why can't the leading indicators soar? They are driven by stimulus that people think at some point will come to an end, then what? Are you going to hire into this liquidty vaccum? Of course not.
It should be well apparent by now that excessive government intervention in our economy is underminning typical and traditional forward looking forecasting and modeling measures.
We don't have a good reference for how actors in the economy behave during these uncertain times.
We can't, eh? Just watch. Initial claims lead.
Driving through the rear-view mirror dangerous.
Leo, we are not in Kansas <inflationary
economy> anymore. Wicked witch of the west
melted. Old inflationary trends no longer our
deflationary friends. Best...
I agree with ATG's sentiments here.
Leo has been led down the path of relying on numbers that have worked very well in inflation/disinflationary environments.
The whole globe is battling deflationary forces, and some dominoes are already beginning to fall (refer to sovereign debt crises in Greece, Spain & Portugal for starters). The U.S. has been able to reflate to a stalemate in price levels after what many consider to be "shock & awe" monetary and fiscal ease. Yeah, we left Kansas sometime last March and haven't returned.
As for the employment situation, I do believe this time is different-- and that employment trends will indeed be a leading indicator of getting out of this morass. Juat as ATG suggests.
As for Leo's assertion about job growth over the next few months-- I think it is certainly plausible (I would go out of my way predicting 10x on ANYTHING that comes out of the Labor Department, btw). We know we will get a positive effect of hiring on the government side due to the Census ramp. And at least layoffs have been "less bad" than the "bad" we witnessed in 2008-09. The real question on should ask is whether job growth can be maintained without the government's stimulus fingerprints all over it. The answer is very uncertain.
The one overriding theme from the employment picture is whether deflationary forces are taking over from reflationary efforts around the globe. The answer appears to be "yes", as some countries have run out of reflatoinary options, facing sovereign default. The U.S. has a few more reflationary bullets left in the holster-- but just remember, the U.S. sovereign debt situation is very likely worse than it seems due to mounting liabilities that the Enron administration won't report on its books.
be careful....i think his 10x is for canada -
not usa....if it is for usa i will be rotflmfao
Leo--hope you made out alright yesterday. Geez, what a day. sure some ZHers are misguided and just rude, but they do mean well.