This page has been archived and commenting is disabled.
Philly Fed Posts Modest Increase, Average Hours Worked Tumble
Ignore corporate margins tumbling to a three year low: the Philly Fed is here to kiss and make it all better, after surging from -12.5 to +2.0 , beating expectations of a -3 headline print. This was driven by a bounce in New Orders from -7.8 to +0.5, Inventories up from -10.0 to 0.0, and number of employees rising from 0.9 to 2.7. Curiously, the average employee workweek plunged from -1.6 to -12.9, but who needs to actually put in hours when one has a part-time job. Alas, if today's Philly Fed, which printed at levels seen last in 2012, 2011, 2010 and 2009, was supposed to push the market higher, it has failed, as economic data is so "pre-QE" - now all that matters is if a central bank will inject a few trillion into the "market", and if yet another sovereign bankruptcy can be prevented at a time when the DJIA has never been higher.
Summarizing the results:
From the report:
Indicators Suggest Increased Activity
The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, increased from a reading of -12.5 in February to 2.0 this month (see Chart). The demand for manufactured goods also showed improvement this month: The new orders index increased from a reading of -7.8 in February to 0.5, its first positive reading in three months. The shipments index showed continued improvement: The index remained positive and edged higher to 3.5. The percentage of firms reporting increased shipments (25 percent) was still only slightly greater than the percentage reporting declines (22 percent).
Labor market conditions showed continued signs of stability, but little overall growth. The employment index increased from 0.9 in February to 2.7 this month, its second consecutive positive reading. The percentage of firms reporting employment increases (17 percent) narrowly exceeded the percentage reporting decreases (14 percent). Firms also reported a decline of average work hours this month. The workweek index declined 11 points.
Indexes Indicate Little Price Pressure
The survey’s price indexes suggest little price pressures again this month. For the third consecutive month, the prices received index was slightly negative. The percentage of firms reporting lower prices for their own manufactured goods (9 percent) exceeded by a slim margin the percentage reporting higher prices (8 percent). With regard to purchased inputs, 17 percent of firms reported paying higher prices for inputs, compared with 13 percent last month. The prices paid index edged slightly lower and is now at its lowest reading in nine months.
More here.
»
- 5279 reads
- Printer-friendly version
- Send to friend
- advertisements -
"Curiously, the average employee workweek plunged from -1.6 to -12.9, but who needs to actually put in hours when one has a part-time job."
That is due to businesses cutting part time workers hours to 29 hours a week to avoid the coming obamacare taxation.
It's income earned from those higher level of hours that accounts for discretionary spending too. Reduce someone's paycheck they stop all discretionary spending to focus on gas and groceries. Except for gas and groceries, Obamacare is going to destroy all discretionary retail sales. Adios profit margins and adios corporate tax collections, RIP and already untenable fiscal deficit. All this = FOMC talk of QE pullback is nothing short of fantasyland talk meant for the gullible and stupid.
Agreed discretionary spending is going to take a serious hit with wages staying stagnant or decreasing. They won't admit it but look at the hit in discretionary spending that happened with the 2% increase in the FDIC payroll tax that took effect at the beginning of the year. And you leave out the other 800 lb gorilla in the room which is tax refunds. Most of the deduction you could get last year at the same wage level are now gone. Pay close attention to discretionary spending in the next 2 months when people usually spend their tax refunds.
Retail is going to take some more Big Hits:
J.C. Penney sales plunge, much worse than expectedhttp://www.nbcnews.com/id/50980277/ns/business-retail/#.UUs1Q1fCq2o
My friend just closed up shop both his physical stores and internet sales due to all the above plus postal rate increases, consumer fraud, higher gas prices... and so on. He said there is no way he can compete with Asia where they can send a package anywhere in the world (with delivery confirmation) for a fraction of the cost then he can here in the USA. This is another spinoff of "Globalization" I suspect. How he will pay his mortgage, kids' education, etc is going to be tough...and I dare say his situation is not an isolated one.
yeah...wife just got an accounting job....24hrs a week
It all goes back to Obamacare.
Obamacare incentivizes employers to hire part time over full time employees or reduce hours below the cutoff for existing full time employees. This should result in an increase in hiring of part time employees over full time (as seen on the last BLS report) as well as a reduction in hours/employee (Philly Fed rpt and BLS report). No matter how it's spun, this is not a healthy employment trend.
Dudes....employers are doing that NOW (and have been for the last 10 years.....Obamacare will only accelerate this).
Employers are just rolling our the corporate/Fed Reserve mandate: and that's to give the working class a wet willy up their collective arses.
It is worse because you the second employer can't skirt the 29 hour workweek limit now.
At least before you could work 2 jobs and the insurance was seperate from each employer now your overall hours are tied to all the employers concerning issurance. Basically you work over 29 hours on 2 part time jobs on the books both employers are on the hook for you as a full time worker on each their payrolls. The companys are capped at 50 full time workers to avoid paying health insurance to part timers.
And this is why discretionary spending is going to get it right up the hoop!
Only on Htrae, aka Bizarro World, can you work negative hours..
Whodathunk?
All of this is about as 'modest' as a Bangkok whore house!
Recycled fraud causing churn.
http://www.thestar.com/news/world/2013/03/20/cyprus_seeks_russian_rescue_eu_threatens_to_cut_off_country.html
Dead Russian whistleblower at forefront of Cyprus bailout crisisGood one. You should post it in a Cyprus thread.
You know how I know the entire survey is bullshit?
If business was really that volatile, everyone would already be out. You can't run a business with components that rise and fall by percentages in magnitudes of ten every month. You wouldn't be able to plan ahead for anything.
Conditions do not change that fast across a range of corporations. Unless the survey decides to focus on a single corporation for the numbers each month to skew the survey to support whatever TPTB wish to accomplish.
One heavy equipment manufacturer might see a huge increase in orders during the month of February, however they probably always see that increase which should be discounted in the survey.
The Fed surveys have nothing to do with true economic conditions, they are just manufactured propaganda to be used to support the stock market.
This report was not "propaganda to ... support the stock market." The numbers show a marked slowdown in business activity.
Orders were barely positive at 0.5. Shipments were up solidly at 3.5. Unfilled orders, delivery times and workweek were all down strongly.
This report is pretty consistently saying businesses are eating their backlogs. This is what production metrics look like just before layoffs. If new orders do not pick up soon, even the part-time jobs will begin to shrink.
This report is also consistent with poor results reported yesterday for FedEx and Oracle. Oracle gets a substantial portion of revenue from enterprise system (MRP, manufacturing, and integrated accounting and shipping) software. FedEx, of course is post-production shipping. Together these two companies cover the entire manufacturing cycle almost completely and their results do not bode well for a sustained "recovery".
Furthermore, reference the ZH articles today concerning lower S&P profits and lower restaurant traffic. It looks as if S&P companies have had to lower prices at the expense of margins to keep revenue stable. The spending power of workers, at least those who eat out regularly, continues to decline.
The ECRI June 2012 recession call may be vindicated if this news and data trend continues.
Any data showing increased inventories, or evidence that raw materials (input commodities) are lagging will pretty much seal the deal.
Finally, if banks were seeing worldwide continued improvement in conditions, they would simply extend bond terms rather than look to depositors to save their poor investments. The desperation in that move has been underestimated - tantamount to eating the seed corn.
SO THIS:
It's just a "data point" to get suckers back into the market, spur up volatility. It's all bullshit.
http://online.wsj.com/article/SB1000142412788732461660457830407242087366...
Here's a trend you'll be reading more about: part-time "job sharing," not only within firms but across different businesses.
It's already happening across the country at fast-food restaurants, as employers try to avoid being punished by the Affordable Care Act. In some cases we've heard about, a local McDonalds has hired employees to operate the cash register or flip burgers for 20 hours a week and then the workers head to the nearby Burger King or Wendy's to log another 20 hours. Other employees take the opposite shifts.
Welcome to the strange new world of small-business hiring under ObamaCare. The law requires firms with 50 or more "full-time equivalent workers" to offer health plans to employees who work more than 30 hours a week. (The law says "equivalent" because two 15 hour a week workers equal one full-time worker.) Employers that pass the 50-employee threshold and don't offer insurance face a $2,000 penalty for each uncovered worker beyond 30 employees. So by hiring the 50th worker, the firm pays a penalty on the previous 20 as well.
These employment cliffs are especially perverse economic incentives. Thousands of employers will face a $40,000 penalty if they dare expand and hire a 50th worker. The law is effectively a $2,000 tax on each additional hire after that, so to move to 60 workers costs $60,000.
A 2011 Hudson Institute study estimates that this insurance mandate will cost the franchise industry $6.4 billion and put 3.2 million jobs "at risk." The insurance mandate is so onerous for small firms that Stephen Caldeira, president of the International Franchise Association, predicts that "Many stores will have to cut worker hours out of necessity. It could be the difference between staying in business or going out of business." The franchise association says the average fast-food restaurant has profits of only about $50,000 to $100,000 and a margin of about 3.5%.
Because other federal employment regulations also kick in when a firm crosses the 50 worker threshold, employers are starting to cap payrolls at 49 full-time workers. These firms have come to be known as "49ers." Businesses that hire young and lower-skilled workers are also starting to put a ceiling on the work week of below 30 hours. These firms are the new "29ers." Part-time workers don't have to be offered insurance under ObamaCare.
The mandate to offer health insurance doesn't take effect until 2014, but the "measurement period" used by the feds to determine a firm's average number of full-time employees started last month. So the cutbacks and employment dodges are underway.
The savings from restricting hours worked can be enormous. If a company with 50 employees hires a new worker for $12 an hour for 29 hours a week, there is no health insurance requirement. But suppose that worker moves to 30 hours a week. This triggers the $2,000 federal penalty. So to get 50 more hours of work a year from that employee, the extra cost to the employer rises to about $52 an hour—the $12 salary and the ObamaCare tax of what works out to be $40 an hour.
Moving to 33 hours a week costs the employer about $10 an hour more in ObamaCare tax. Look for fewer 30-35 hour-a-week jobs. The law that was sold as a way to help business and workers is thus yanking a few more rungs from the ladder of economic upward mobility.
Many franchisees of Burger King, McDonalds, Red Lobster, KFC, Dunkin' Donuts and Taco Bell have started to cut back on full-time employment, though many are terrified to talk on the record. Activist groups have organized boycotts against Darden Restaurants, which owns Olive Garden and Red Lobster, for daring to publicly criticize ObamaCare. It's safer to quietly dodge the new costs and avoid becoming a political target.
But the damage won't be limited to franchisees or restaurants. A 2012 survey of employers by the Mercer consulting firm found that 67% of retail and wholesale firms that don't offer insurance coverage today "are more inclined to change their workforce strategy so that fewer employees meet that [30 hour a week] threshold." This week Nigel Travis, the CEO of Dunkin' Donuts, asked Congress to change the health law's definition of full-time to 40 hours a week from 30 hours so worker hours won't have to be cut.
The timing of all this couldn't be worse. Involuntary part-time U.S. employment is already near a record high. The latest Department of Labor employment survey counts roughly eight million Americans who want a full-time job but are stuck in a part-time holding pattern. That number is down only 520,000 since January 2010 and it is 309,000 higher than last March. (See the nearby chart.) And now comes ObamaCare to increase the incentive for employers to hire only part-time workers.
Democrats who thought they were doing workers a favor by mandating health coverage can't seem to understand that it doesn't help workers to give them health care if they can't get a full-time job that pays the rest of their bills.
"...firms with more then 50 employees...."
I used to have 54 but 5 (regretably) went down in that boat with all the yellow metal...so now I have fewer then 50...
Sad story, yes?
what the 'federal reserve banking system' is,... is a cell of financial terrorist out to destroy america's financial sovereignty-- what should be recognizable to all law abiding citizens as a band of pure unadulterated, espionageTraitor's!
Wait until this time next month. Us government workers will be getting our 30 day notices of furlough in the next day or two. Everyone I work with makes less than $50,000 a year. After taxes I make around $2800.00 a month. We are going to be forced to take one day off per week unpaid for the next 22 days. Most of us will survive, but our spending will be MUCH REDUCED. My personal spending has been much reduced for half a year now in anticipation of this event. My spending will stay confined to food and energy for the foreseeable future. Same with everyone else I talk to at work.
800,000 people going from full time to part time starting mid month April. Something to look forward to. That ought to put a big dent in the hours worked category. ;-)
Another view, probable recession?
http://www.nowandfutures.com/images/coincident_lag_recession.png