Unemployment: Some "Good" News

This article originally appeared in The Daily Capitalist.


Here is a good summary of yesterday's employment news:

We actually have some positive news in that the Establishment Jobs Survey shows that total private nonfarm employment increased by 159,000 jobs. But the negative is that there weren't enough new jobs created to reduce the overall unemployment rate which is stuck at 9.6% (the so-called U-3 rate of unemployment in the Household Survey). There are 14.8 million unemployed workers.

The overall total rate of unemployment (U-6) is still high at 17%. The U-6 rate accounts for "persons marginally attached to the labor force are those who currently are neither working nor looking for work but indicate that they want and are available for a job and have looked for work sometime in the past 12 months. Discouraged workers, a subset of the marginally attached, have given a job-market related reason for not currently looking for work. Persons employed part time for economic reasons are those who want and are available for full-time work but have had to settle for a part-time schedule." 42% of unemployed Americans, or 6.2 million people, were out of work for more than six months.

Click chart to enlarge

In the private sector, service-providing jobs advanced 154,000 after an 111,000 increase in September. Within services for October, temp help gained 35,000; health care added 24,000 jobs; and retail trade jumped 28,000. Goods-producing industries edged up 5,000 after a 4,000 dip in September. In the latest month, manufacturing was little changed, slipping 7,000; construction rose 5,000; and mining increased 8,000.


Average hourly earnings gained 0.2 percent in October after rising 0.1 percent in September. The October number matched the market forecast. The average workweek for all workers edged up to 34.3 hours from 34.2 hours in October, marginally topping expectations for 34.2 hours. On a year-ago basis, overall payroll job growth rose to up 0.6 percent in October from up 0.3 percent the month before.

If we factor in the new jobless claims, we can see from the report for the week of October 23 that they are stuck in the 440-490,000 range since December 2009.

The Challenger, ADP, and Monster indices have flattened out as well. This indicated that job creation is on stall mode, but perhaps starting to slightly improve as the Establishment Survey shows us.

If anyone can find the brown lining in the silver cloud, it is Dave Rosenberg at Gluskin Sheff:

The headline was undoubtedly strong, as were some of the details, but we want to warn readers that this was not a universally solid report. First, within the nonfarm report itself, virtually all the gains were in three sectors — health/education, retail trade and waste/administrative services. Goods-producing employment barely rose. The diffusion index for private payrolls dipped in October, to 55.0 from 55.6, which is a four-month low, and for manufacturing, the diffusion index fell to 42.1 from 54.3, which is the lowest since December 2009. So while there was depth to the report, in terms of magnitude, there was not a whole lot of breadth to it. Many sectors still reported job declines last month, including manufacturing, commercial and residential construction, transportation, information, financial and government. As I said, not a universally strong report, notwithstanding the solid headline results.


Moreover, the Household Survey showed a 330,000 decline in October, and again, full-time jobs declined, as they have for each of the past five months for a cumulative plunge of 1.1 million. The employment-to-population rate — the share of the population that is working — fell to 58.3% from 58.5%, a 10-month low.

Tyler Durden at Zero Hedge has calculated that we need to create about 232,400 a month to bring employment back to pre-crash levels by the end of Obama's second term. Obviously we are nowhere near that. Which is why Ben Bernanke is gambling with our future by printing money to stimulate the economy. It will end badly in my opinion with inflation without the growth (stagflation).


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