Friday, September 2, 2011

The "0" Jobs Report

With Bonddad on vacation, I thought I would step in and summarize this less than stellar jobs report (its me SilverOz).

Let's start out with the headline numbers, which showed 0 job creation on the Establishment Survey and included downward revisions for both June and July as well. The report also showed that several leading indicators from the report also declined (hours worked and pay) marginally. And while the official U-3 unemployment rate remained unchanged at a very high 9.1%, U-6 picked up a tenth of a point to rise to 16.2% and my personal favorite measure, U-5, did decline a tenth to 10.6%. In good news (if this can be called that), both the participation rate and employment-population ratio gained a tenth of a point and in even better news, the Household Survey showed a gain of 331,000 jobs last month.

In other "good" news, the number of both those not in the labor force and those not in the labor force that want a job declined as over 350,000 people entered the labor force last month. And while we need these re-entrants, we must also recognize that they will have a dampening effect on the U-3 unemployment rate as they return.

Obviously, the Verizon strike had an impact on the numbers, but even discounting that (since it will be added back in next month and needs to be discounted then as well), we would only be up 45,000 jobs. Government continues to be a drag on employment, shedding another 17,000 with all of those losses essentially coming from local governments.

Once again we are also seeing the real return of an educationally bifurcated economy, as those with either some college or a college degree gained (Household Survey numbers) 449,000 jobs last month, which was offset by losses of 581,000 jobs by those with just a high school diploma (all numbers are for ages 25+). The economy actually appears to be doing ok for those with a post-secondary education, but still mired in losses for those without.

Overall, this report was particularly bad as not only did it show no headline job growth, but 2 of the leading indicators from the report dipped this month and it continues to showcase a deceleration of the economy and the jobs picture that has materialized over the past few months. Once again though, this seems (at this point) relegated to those without higher educational attainment and the youth (ie under 25) as opposed to broad based declines (again, at this point). the report for September should be especially interesting, as it will be the first report that would fully include the fallout of the recent spate of negative numbers and loss of confidence (as we must remember that hiring decisions are typically made at least a full month prior to actually taking place).

And once again, this summary was brought to you by SilverOz.