Mixed Labor Data Messages Clarified

It Still Spells Trouble

Weekly Jobless Claims have produced an improving trend over the last month and continued telling that same story at latest check. However, the Labor Department's Employment Situation Report for November, published last week, still showed an increase in the unemployment rate and a moderated rate of net job addition. So what gives then? Well, keep reading...

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

(Relative Tickers: NYSE: RHI, NYSE: KFY, NYSE: MAN, NYSE: MWW, Nasdaq: KELYA, Nasdaq: JOBS, NYSE: JOB, Nasdaq: CECO, Nasdaq: PAYX, NYSE: ASF, Nasdaq: KFRC, NYSE: TBI, NYSE: DHX, NYSE: SFN, NYSE: CDI, Nasdaq: CCRN, Nasdaq: ASGN, NYSE: AHS, Nasdaq: BBSI, Nasdaq: HHGP, NYSE: SRT, Nasdaq: RCMT, Nasdaq: VSCP, OTC: ASRG.OB, OTC: MCTH.OB, OTC: IGEN.OB, OTC: STJO.OB, OTC: TNUS.OB, Nasdaq: TSTF, OTC: STTH.OB, OTC: PSRU.OB, OTC: CRRS.OB, NYSE: BAC, NYSE: JPM, NYSE: GS, NYSE: C, NYSE: MS, NYSE: WFC, NYSE: TD, NYSE: PNC, NYSE: GE, NYSE: WMT, NYSE: MCD, NYSE: AA, NYSE: AXP, NYSE: BA, NYSE: CAT, Nasdaq: CSCO, NYSE: CVX, NYSE: DD, NYSE: DIS, NYSE: HD, NYSE: HPQ, NYSE: IBM, Nasdaq: INTC, NYSE: JNJ, NYSE: KFT, NYSE: KO, NYSE: MMM, NYSE: MRK, Nasdaq: MSFT, NYSE: PFE, NYSE: PG, NYSE: T, NYSE: TRV, NYSE: UTX, NYSE: VZ, NYSE: XOM, NYSE: DIA, NYSE: SPY, Nasdaq: QQQQ, NYSE: DOG, NYSE: SDS, NYSE: QLD, NYSE: NYX, NYSE: ICE, Nasdaq: NDAQ, NYSE: AIG, NYSE: WPO, NYSE: VTR, NYSE: CVH, NYSE: AMT, NYSE: AER, Nasdaq: AHPI, NYSE: ABR, NYSE: BZH, NYSE: BAM, Nasdaq: CADX, Nasdaq: CEDC, Nasdaq: DISH, NYSE: DRL, Nasdaq: ENSL, NYSE: FIG, NYSE: FCN, AMEX: HH, NYSE: IAG, NYSE: IEP, Nasdaq: LINTA, Nasdaq: NATH, Nasdaq: NVAX, Nasdaq: REVU, Nasdaq: RAND, Nasdaq: ROSE, NYSE: TSG, NYSE: SUP, NYSE: TTI, NYSE: TM, Nasdaq: YRCW)

Mixed Labor Data Messages Clarified

Americans must be confused by the mixed messages offered by the Labor Department. While weekly jobless claims clearly seem to be moderating, the monthly unemployment rate just spiked again. Weekly Jobless Claims for the period ended December 4, fell 17K to 421K, down from 438K the week just prior. Still, the latest Labor Department data showed the unemployment rate increased to 9.8% in November, up from the 9.6% rate seen through the prior three months. We will clear up this inconsistency for you here so you can concentrate on logical consistencies of the day, like holiday parties and foreclosure notices.

The first thing you must understand is that weekly jobless claims will occur even in the best of economic environments. There will always be a business failing, or downsizing or consolidating for whatever reason. In order to see the unemployment rate change for the better, we need a weekly flow of jobless claims somewhere short of 400K, or closer to 300K.

The size of the labor force is always increasing also, raising the bar so to speak as America's youths graduate into working age and begin seeking employment. Considering the tough environment, we also have pressure from retirees returning to work these days. When it comes down to it, we need economic growth to increase demand for employees. That can come from increased consumer spending, but also from the growth of business and industry where opportunity may lie untapped. This is why President Obama places so much hope in alternative energy. It can be a replacement industry for coal and pick up the slack from a mature US auto industry. Further, the auto industry, as well as all US manufacturing can benefit from a fairer international trade playing field, another of the administration's good goals (note South Korean trade deal and pressure on the Chinese with regard to their currency).

The four-week moving average of weekly initial jobless claims illustrates the favorable trend we outlined above. The claims average slipped another 4,000 this last week, to 427,500, the lowest it has been in two years. Furthermore, the seasonally adjusted insured unemployment rate improved anther two-tenths of a point, to 3.2% for the period ended November 27. This is the kind of data that gave economists the confidence they exhibited in setting their non-farm payroll forecasts for November at +168,000, based on Bloomberg's survey. This is precisely the reason why the market was so surprised on Friday when payrolls instead measured +39,000.

The good news relayed by the weekly claims data seems to be that companies are laying people off at a slower rate, but that message was absent in the latest monthly layoff data. Challenger, Gray & Christmas reported that announced corporate layoffs surged to an 8-month high in November, reaching 48,711. It was the highest announced job-cut total since March, when companies announced layoffs of 67,611. Seasonal influence to the November disaster may have played a role according to Challenger, but given that this year's period was just 3.3% short of the prior year count, we are not so sure. It is more likely that there is a cyclical factor at play, and the good news is that it's a lagging indicator.

Government and nonprofit employers were at the forefront of firing in November, announcing 10,761 layoffs through the month. In fact, while overall announced layoffs dropped 60% this year to date, the government and non-profit sector have led the full year's downsizing, cutting 138,979 jobs. Obviously, this is the direct result of heightened pressure on governments, municipal, state and federal, to cut costs to balance budgets or otherwise positively impact deficits.

Flying within radar, but not often spoken of is the decrease in charitable contributions that follows downturns in economic activity. Layoffs in this sector should lag general economic decline, and the same goes for government, which is reactionary. One step the government might take in providing stimulus is by instituting a firing freeze at all government levels. These can be controlled at the federal level, and subsidized otherwise. Keep people working, and you keep them sharp and spending at normal rates.

We could call the lag in government and charitable layoffs good news, if these same two factors played important roles in the increased unemployment rate in November. Indeed, government job decline of 11,000 affected November's data, but the reasons for the sharp miss were much broader. That said, Challenger noted a historical tendency for late-in-the-year cuts, and also said increased hiring announcements offered some offset. To me this sounds like the data-minder was simply molding its qualitative reporting to fit the positive consensus outlook for the Labor Department data, which was yet to be disproved (reported two days later).

Inspection of the Employment Situation Report showed big reductions in Retail Trade (-28.1K), Manufacturing (-13K), Financial Activities (-9K) and Construction (-5K), complementing the government (-11K) and other services (-8K) drops. The big retail industry shrinkage was a shocker to many, but understood within short time. Retailers had added to staff earlier this year, in order to best exploit the intensified deal-seeking community. There were earlier-than-Black Friday deals run, and extended hours offered on Black Friday and after, which needed to be staffed for. This reported decline might reflect a temporary lull in part-timers, who could be rehired before Christmas (heard first here). The moderation in manufacturing, at this point, has been well-documented here, and it goes on within ongoing catastrophic environments in the finance and construction fields. Look for increasing M&A activity to drive change for Wall Street in 2010, barring a problematic war with Iran.

We like to look into the bottom line numbers to get to the truth. When we do that for November's employment data, we discover that the unemployed count (numerator) increased by 276K, to 15,119,000. The Civilian Labor Force (denominator) also increased, as it should, but by only 103K, to 154,007,000. Oftentimes in the past, change in the unemployment rate has been impacted by suspect change in the size of the labor force.

Biased Data Producers Should Be Audited!

We find it funny that no matter what party controls the White House, economic data seems to favor its needs. You will recall how economic data (especially with regard to jobs), while bad, fell off a cliff almost immediately after George W. Bush lost the presidential election. We have to wonder if the data flow was held up in Atlas-like fashion by biased Bush-backers running these agencies. A lot of these jobs are filled by politicos, or active supporters of the candidates post election. This time around, just as President Obama needed populous support to get tax breaks cut off for the rich, and while the GOP held hostage unemployment insurance extensions, unemployment unexpectedly spiked sharply and nonfarm payrolls severely missed forecasts. The result was intensified pressure on the government to extend unemployment insurance further, which favored the President and the Democrats, considering the GOP's positioning. Hey this seems to happen on both sides, and I'm just saying… Someone needs to look into this.

Under-Employment

The underemployment rate offers a better forecasting tool than unemployment for the American economy, because it shows how stressed American consumers really are. The under-employment rate takes into account part-time workers, who would rather be working full-time (and oftentimes once were). These people are thus spending a lot less as they seek to sustain their old lifestyles, meaning homes they cannot really afford and cars that do not fit their current income. The part-timers count declined last month by 182K; the impact to the labor rates here depends on whether the part-timers replaced their hours with full-time work or hit the jobless line instead. Since unemployment increased, the latter seems to be the case this time around. Job losses may have been driven here by the declines in weak sectors this month. Companies fire part-timers first, just as they hire them first. Temporary workers increased in numbers in November though, by 40K.

The under-employment rate also adds back into the calculation the group of folks that the government deems removed from the labor force, simply due to long-term unemployment induced depression that leads them to stop job search activity over a short span of weeks. We think they still count, and we know they are impacting GDP.

Thus, if we add back the 2.531 million (previously 2.602 mln.) displaced workers to the labor market, and include the 8.972 million (previously 9.154 mln.) underemployed part-timers in the unemployed count, adjusted unemployment reaches ((15.119M + 2.531M + 8.972M) / (154.007M + 2.531M)) * 100 = 17.0 %. That's equal to October's rate, and compares to September's 17.1% rate, 16.7% in August; 16.5% in July and June; 16.6% in May; 17.1% in April; 16.9% in March; 16.8% in February; and 16.4% in January. You can see clearly here that the factors that impact underemployment but not unemployment shifted to the unemployed pool, which factors in both calculations. Thus underemployment held steady, while unemployment increased.

In conclusion, while some comfort can be taken from the fact that we seem to have stopped bleeding jobs, we remain at risk of reopening the wound. Furthermore, the burden of a large pool of long-term unemployed Americans acts as a major drag to economic growth. It thus becomes a leading factor, versus the lagging indicator it is often labeled. Thus, the mixed message provided by the two labor reports is consistent with reality. Neither data-point is reporting in error or misleading economic forecasters. Rather, both offer insight into a complex labor situation. To put it simply, we're still troubled.

FYI:
The highest insured unemployment rates in the week ending Nov. 20 were in Alaska (6.1 percent), Puerto Rico (5.5), Oregon (4.4), Nevada (3.9), Pennsylvania (3.9), California (3.7), Idaho (3.7), Montana (3.7), New Jersey (3.7), Arkansas (3.6), Wisconsin (3.6), and Connecticut (3.5).

The largest increases in initial claims for the week ending Nov. 27 were in Wisconsin (+7,545), Iowa (+2,789), Idaho (+1,810), Indiana (+1,667), and Washington (+1,260), while the largest decreases were in Texas (-8,742), California (-8,320), Florida (-7,027), Georgia (-5,823), and North Carolina (-4,171).

Article should interest investors in Paychex (Nasdaq: PAYX), Manpower (NYSE: MAN), Robert Half International (NYSE: RHI), 51Job Inc. (Nasdaq: JOBS), Monster World Wide (NYSE: MWW), Korn/Ferry International (NYSE: KFY), Administaff (NYSE: ASF), Kforce (Nasdaq: KFRC), TrueBlue (NYSE: TBI), Dice Holdings (NYSE: DHX), Kelly Services (Nasdaq: KELYA), SFN Group (NYSE: SFN), CDI Corp. (NYSE: CDI), Cross Country Healthcare (Nasdaq: CCRN), On Assignment (Nasdaq: ASGN), AMN Healthcare Services (NYSE: AHS), Barrett Business Services (Nasdaq: BBSI), Hudson Highland Group (Nasdaq: HHGP), StarTek (NYSE: SRT), RCM Technologies (Nasdaq: RCMT), VirtualScopics (Nasdaq: VSCP), American Surgical (OTC: ASRG.OB), Medical Connections (OTC: MCTH.OB), iGen Networks (OTC: IGEN.OB), St. Joseph (OTC: STJO.OB), General Employment Enterprises (NYSE: JOB), Total Neutraceutical (OTC: TNUS.OB), TeamStaff (Nasdaq: TSTF), Stratum (OTC: STTH.OB), Purespectrum (OTC: PSRU.OB), Corporate Resource Services (OTC: CRRS.OB), Bank of America (NYSE: BAC), J.P. Morgan Chase (NYSE: JPM), Goldman Sachs (NYSE: GS), Citigroup (NYSE: C), Morgan Stanley (NYSE: MS), Wells Fargo (NYSE: WFC), TD Bank (NYSE: TD), PNC Bank (NYSE: PNC), General Electric (NYSE: GE), Wal-Mart (NYSE: WMT), McDonald's (NYSE: MCD), Alcoa (NYSE: AA), American Express (NYSE: AXP), Boeing (NYSE: BA), Caterpillar (NYSE: CAT), Cisco Systems (Nasdaq: CSCO), Chevron (NYSE: CVX), DuPont (NYSE: DD), Walt Disney (NYSE: DIS), Home Depot (NYSE: HD), Hewlett-Packard (NYSE: HPQ), IBM (NYSE: IBM), Intel (Nasdaq: INTC), Johnson & Johnson (NYSE: JNJ), Kraft (NYSE: KFT), Coca-Cola (NYSE: KO), 3M (NYSE: MMM), Merck (NYSE: MRK), Microsoft (Nasdaq: MSFT), Pfizer (NYSE: PFE), Procter & Gamble (NYSE: PG), AT&T (NYSE: T), Travelers (NYSE: TRV), United Technologies (NYSE: UTX), Verizon (NYSE: VZ), Exxon Mobil (NYSE: XOM). Today’s EPS report list highlights news from American International Group (NYSE: AIG), Washington Post (NYSE: WPO), Ventas (NYSE: VTR), Coventry Health Care (NYSE: CVH), American Tower (NYSE: AMT), AerCap Holdings (NYSE: AER), Allied Healthcare (Nasdaq: AHPI), Arbor Realty Trust (NYSE: ABR), Beazer Homes (NYSE: BZH), Brookfield Asset Management (NYSE: BAM), Cadence Pharmaceuticals (Nasdaq: CADX), Central European Distribution (Nasdaq: CEDC), Dish Network (Nasdaq: DISH), Doral Financial (NYSE: DRL), Entech Solar (Nasdaq: ENSL), Fortress Investment (NYSE: FIG), FTI Consulting (NYSE: FCN), Hooper Holmes (AMEX: HH), IAMGold (NYSE: IAG), Icahn Enterprises (NYSE: IEP), Liberty Media (Nasdaq: LINTA), Nathan’s Famous (Nasdaq: NATH), Novavax (Nasdaq: NVAX), Princeton Review (Nasdaq: REVU), Rand Capital (Nasdaq: RAND), Rosetta Resources (Nasdaq: ROSE), Sabre Holdings (NYSE: TSG), Superior Industries (NYSE: SUP), TETRA Tech (NYSE: TTI), Toyota (NYSE: TM) and YRC Worldwide (Nasdaq: YRCW).



Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Unemployment Benefits Not Extended

Merry Christmas!

The US Congress, led by a pompous opposition, gifted to Americans some coal this holiday season. Indeed, it shall be a blue Christmas without their unemployment checks this year. Congress did not extend unemployment benefits through the midnight deadline of November 30. Republican voices argue that this is an unfunded program that is feeding into the budget deficit, which everyone concedes as fact. Even so, I expect this to be only a temporary delay, and the process might even help the economy a bit. If not, I'll see you at the welfare office this New Year's Eve...

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

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Unemployment Benefits Not Extended

The argument goes that the extension of unemployment benefits for another year will cost $60 billion that the government does not have. Meanwhile, the GOP would like tax breaks to be extended for the nation's highest earners, the cost of which is estimated upward of $700 billion. Those high-end tax breaks have been shown to have little impact on economic growth, while Goldman Sachs (NYSE: GS) estimates the failure to extend unemployment payments, money quickly spent when received, could cut 0.5% off GDP, which supports employment.

Legislation Delay a Positive, Cancellation a Negative

Sit down for a second and consider this unpopular idea, and please read the entire article. There is a possibility that this inaction could have some unintended benefit, as it may provide impetus to a fringe group of jobless people that will happily sit idle for as long as the money flows. Perhaps a fire is lit under some to be more aggressive and self-propelled. More small businesses might develop, and an increased number of people might take lower wages and more menial work then they would prefer. While I'm relatively certain this GOP block is a political ploy to gain the party some leverage on tax and other issues, if it does not last long, it might prove helpful. There is a small group of jobless that actually enjoy what most consider an incredibly anxious situation. It's a small group, but they are out there just the same.

I know as well as anyone that this does not describe the majority of the unemployed, who have spent lifetimes and significant funds to acquire a skill, expertise or education. Most Americans have ambition and a certain level of pride that keeps them pushing forward. Those folks see their economic situation clearly and understand the psychological impact of their unemployment as well. Let's not forget also that they have families to feed and established lifestyles burdening them.

I'm certainly not judging. I know you need your checks, because I had to live without them after my own unemployment income ran out and before this blog could pay my electric bill. I do not and did not ever qualify for unemployment extensions. There are many hardworking Americans out there who lost their job before the threshold date to qualify for extensions. Those folks are having just as hard a time to find work as you have been, though they have not been receiving checks. They have lost assets, and their families have fallen apart as a result. What you are tasting now is what they have been chewing on for a few years of serious hardship. So, I say to the government, remember those people as well! Their homes are in foreclosure; they are starving; and this bill does nothing to help them!

It's not the first time Republicans (I've converted to Independent) have picked the wrong battle to wage. You would have thought they might have learned, but the GOP again wages war on this same field of battle. You will recall when Kentucky Senator Jim Bunning obstructed extension legislation earlier this year. It was insulting then, and it is insulting now! Besides the obvious reasons to continue paying, it is just the completely wrong time to stop, unless you want to see an increase in holiday suicides this year. And the fact remains that there are about 2 to 3 million jobs available on the market for a pool of job seekers that includes 15 million unemployed.

If this continues for more than a few days, Congress can expect a good portion of the 2 million folks they are cutting off to come knocking on their doors; and they won't be there to sing Christmas carols. They'll be there to collect their own money, paid in taxes over the course of years. Whatever the case, I'll see you at the food bank and welfare office this New Year's Eve if this bill is not passed soon…



Article should interest investors in Paychex (Nasdaq: PAYX), Manpower (NYSE: MAN), Robert Half International (NYSE: RHI), 51Job Inc. (Nasdaq: JOBS), Monster World Wide (NYSE: MWW), Korn/Ferry International (NYSE: KFY), Administaff (NYSE: ASF), Kforce (Nasdaq: KFRC), TrueBlue (NYSE: TBI), Dice Holdings (NYSE: DHX), Kelly Services (Nasdaq: KELYA), SFN Group (NYSE: SFN), CDI Corp. (NYSE: CDI), Cross Country Healthcare (Nasdaq: CCRN), On Assignment (Nasdaq: ASGN), AMN Healthcare Services (NYSE: AHS), Barrett Business Services (Nasdaq: BBSI), Hudson Highland Group (Nasdaq: HHGP), StarTek (NYSE: SRT), RCM Technologies (Nasdaq: RCMT), VirtualScopics (Nasdaq: VSCP), American Surgical (OTC: ASRG.OB), Medical Connections (OTC: MCTH.OB), iGen Networks (OTC: IGEN.OB), St. Joseph (OTC: STJO.OB), General Employment Enterprises (NYSE: JOB), Total Neutraceutical (OTC: TNUS.OB), TeamStaff (Nasdaq: TSTF), Stratum (OTC: STTH.OB), Purespectrum (OTC: PSRU.OB), Corporate Resource Services (OTC: CRRS.OB), Bank of America (NYSE: BAC), J.P. Morgan Chase (NYSE: JPM), Goldman Sachs (NYSE: GS), Citigroup (NYSE: C), Morgan Stanley (NYSE: MS), Wells Fargo (NYSE: WFC), TD Bank (NYSE: TD), PNC Bank (NYSE: PNC), General Electric (NYSE: GE), Wal-Mart (NYSE: WMT), McDonald's (NYSE: MCD), Alcoa (NYSE: AA), American Express (NYSE: AXP), Boeing (NYSE: BA), Caterpillar (NYSE: CAT), Cisco Systems (Nasdaq: CSCO), Chevron (NYSE: CVX), DuPont (NYSE: DD), Walt Disney (NYSE: DIS), Home Depot (NYSE: HD), Hewlett-Packard (NYSE: HPQ), IBM (NYSE: IBM), Intel (Nasdaq: INTC), Johnson & Johnson (NYSE: JNJ), Kraft (NYSE: KFT), Coca-Cola (NYSE: KO), 3M (NYSE: MMM), Merck (NYSE: MRK), Microsoft (Nasdaq: MSFT), Pfizer (NYSE: PFE), Procter & Gamble (NYSE: PG), AT&T (NYSE: T), Travelers (NYSE: TRV), United Technologies (NYSE: UTX), Verizon (NYSE: VZ), Exxon Mobil (NYSE: XOM).

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Jobless Claims Inspire Stocks

Better Than Turkey!

Wall Street Greek readers today enjoyed the punch line of an inside joke we've shared amongst ourselves. A couple months back, we scribbled on these ethereal pages that a nice new catalyst for stocks would be weekly jobless claims nearing 400K or falling under that mark. Today's Labor Department report noted claims at 407K, and stocks rallied sharply (Dow +1.4%), recovering from a bad outing Tuesday.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

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Jobless Claims Inspire Stocks

When Jobless Claims dropped under 450K over recent weeks, we noted the market's special enthusiasm expressed through stock buying activity. The action was right in line with our own expectations and calls for a bullish catalyst near the 400K level.

Having witnessed the stale state of labor affairs over the last year, we came to understand that investors were coming to grips with a new reality. Folks were learning to live with a lumbering economy, and they were not buying stocks anymore.

Heading into the November elections, and once it became clear in late August that the Tea Party Republicans were going to bring back balance to Congress and leave tax breaks in place, stocks trended higher. But since the elections, the market has lacked reason to rise. QE2 was supposed to provide a new catalyst, but equalizing currency drivers in Europe (Ireland) and Asia (Korea) sort of offset hopes for export opportunities. The race to the bottom for fiat currency has begun, but that is another tragedy we will discuss later. I realize there are still other benefits to reap from quantitative easing, but I just find the Fed's arsenal weak and see QE2 as the wrong gear for the war we are waging (look for our pending article on this as well).

What Had Happened...

For the week ended November 20, Initial Unemployment Insurance Claims tallied 407K, down 34K from the prior week's revised count of 441K. Many states commented that a shorter workweek may have aided the count, but Veterans' Day fell on November 11, which is outside of the measured period. The only other holiday was the Islamic Eid al-Adha, which is known to Christians and Jews as the day Abraham trusted in God and was willing to sacrifice his son Isaac. The Muslim Hajj also began during the week, and perhaps played some role.

So are Muslims such an important minority in the US now that Islamic holidays influence economic data? There is no accurate count of the number of Muslims in America, but it is estimated by reputable sources to be between 5 to 7 million (by US News & World Report and the Council on American-Islamic Relations).

That said, the recent data trail has offered us enough insight to determine that the cut in jobless claims has more to do with decreasing layoff activity than seasonal factors. After all, the four-week moving average declined another 7,500 in this latest period, to 436K.

The insured unemployment rate declined again, by another tenth of a point, to 3.3% in the November 13 period. 142,000 people fell out of the insured unemployed pool, leaving 4.182 million through November 13. The four-week moving average also fell here, to 4.309 million. The news is indisputably good, and so stocks had solid basis to react to it Wednesday. Continued improvement in this labor data point, should it occur, should prove a lasting catalyst for stocks as well. Perhaps we really do have something to be thankful for this Thanksgiving after all.

FYI

Extended benefits were available in Alabama, Alaska, Arizona, California, Colorado, Connecticut, Delaware, the District of Columbia, Florida, Georgia, Idaho, Illinois, Indiana, Kansas, Kentucky, Maine, Massachusetts, Michigan, Minnesota, Missouri, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Oregon, Pennsylvania, Puerto Rico, Rhode Island, South Carolina, Tennessee, Texas, Virginia, Washington, West Virginia, and Wisconsin, during the week ending Nov. 6.

The highest insured unemployment rates in the week ending Nov. 6 were in Puerto Rico (5.8 percent), Alaska (5.7), Oregon (4.3), Pennsylvania (4.0), California (3.9), Nevada (3.9), New Jersey (3.9), Arkansas (3.6), Connecticut (3.6), South Carolina (3.5), and Wisconsin (3.5).



Article should interest investors in Paychex (Nasdaq: PAYX), Manpower (NYSE: MAN), Robert Half International (NYSE: RHI), 51Job Inc. (Nasdaq: JOBS), Monster World Wide (NYSE: MWW), Korn/Ferry International (NYSE: KFY), Administaff (NYSE: ASF), Kforce (Nasdaq: KFRC), TrueBlue (NYSE: TBI), Dice Holdings (NYSE: DHX), Kelly Services (Nasdaq: KELYA), SFN Group (NYSE: SFN), CDI Corp. (NYSE: CDI), Cross Country Healthcare (Nasdaq: CCRN), On Assignment (Nasdaq: ASGN), AMN Healthcare Services (NYSE: AHS), Barrett Business Services (Nasdaq: BBSI), Hudson Highland Group (Nasdaq: HHGP), StarTek (NYSE: SRT), RCM Technologies (Nasdaq: RCMT), VirtualScopics (Nasdaq: VSCP), American Surgical (OTC: ASRG.OB), Medical Connections (OTC: MCTH.OB), iGen Networks (OTC: IGEN.OB), St. Joseph (OTC: STJO.OB), General Employment Enterprises (NYSE: JOB), Total Neutraceutical (OTC: TNUS.OB), TeamStaff (Nasdaq: TSTF), Stratum (OTC: STTH.OB), Purespectrum (OTC: PSRU.OB), Corporate Resource Services (OTC: CRRS.OB), Bank of America (NYSE: BAC), J.P. Morgan Chase (NYSE: JPM), Goldman Sachs (NYSE: GS), Citigroup (NYSE: C), Morgan Stanley (NYSE: MS), Wells Fargo (NYSE: WFC), TD Bank (NYSE: TD), PNC Bank (NYSE: PNC), General Electric (NYSE: GE), Wal-Mart (NYSE: WMT), McDonald's (NYSE: MCD), Alcoa (NYSE: AA), American Express (NYSE: AXP), Boeing (NYSE: BA), Caterpillar (NYSE: CAT), Cisco Systems (Nasdaq: CSCO), Chevron (NYSE: CVX), DuPont (NYSE: DD), Walt Disney (NYSE: DIS), Home Depot (NYSE: HD), Hewlett-Packard (NYSE: HPQ), IBM (NYSE: IBM), Intel (Nasdaq: INTC), Johnson & Johnson (NYSE: JNJ), Kraft (NYSE: KFT), Coca-Cola (NYSE: KO), 3M (NYSE: MMM), Merck (NYSE: MRK), Microsoft (Nasdaq: MSFT), Pfizer (NYSE: PFE), Procter & Gamble (NYSE: PG), AT&T (NYSE: T), Travelers (NYSE: TRV), United Technologies (NYSE: UTX), Verizon (NYSE: VZ), Exxon Mobil (NYSE: XOM). The day’s earnings included Deere (NYSE: DE), Tiffany (NYSE: TIF), China Cord Blood (NYSE: CO) and Frontline (NYSE: FRO).

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Should Unemployment Insurance Extension Benefits be Renewed Through the November 30, 2010 Deadline?

Should We Extend Them Again?

As the President returns from overseas and as the freshman Congressional class arrives in Washington D.C., first up on the legislative agenda is the decision to extend and renew unemployment insurance extension compensation or not. The current legislation allows for extended benefits only until November 30th.

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Some politicians and economists believe we may be approaching a point where this extraordinary and important aid acts as a crutch we've grown too used to. Before the Republican Party regained balance, there were voices emanating from it to ease back unemployment benefits to normal flow. There is an active viewpoint regarding a theorized negative impact of unemployment insurance, which argues that it acts as a support to the lazy. Given their fiscal concerns, this could be a point of argument for Tea Party Republicans and even Blue Dog Democrats, and so another extension of benefits is not guaranteed.

Our friends in the United Kingdom recently implemented rules to penalize welfare recipients who are not accepting work opportunities. We already have these guards in place, but enforcement is suspect; that's likely due to the size of the task at hand these days and a lack of human capital and funding to get the job done.

Do you think unemployment insurance keeps people from seeking work? I know people who have avoided taking part-time work because it would not match their income earned for sitting idle. I know still more others who realize that taking a part-time job could limit their critical income if laid off, as it would set new basis for their benefit calculation.

I think there are clear solutions to solving these conundrums, and they can be employed by creating a more critical unemployment insurance calculation, and by making it widely known to the American public. As is always the case, painted black and white issues offer opportunities for better measure in the gray area in between.

I recently wrote about the importance of the fourth quarter to the American economy, and that no matter what, the extension of benefits should run at least through the critical period. Where do you stand on this subject? Are we spending too much to support slackers or is this spending necessary to keep Americans from foreclosure, bankruptcy and fiscal demise, and the economy with it?

Should Unemployment Insurance Extension Benefits be Renewed Through the November 30, 2010 Deadline?

Article should interest investors in Paychex (Nasdaq: PAYX), Manpower (NYSE: MAN), Robert Half International (NYSE: RHI), 51Job Inc. (Nasdaq: JOBS), Monster World Wide (NYSE: MWW), Korn/Ferry International (NYSE: KFY), Administaff (NYSE: ASF), Kforce (Nasdaq: KFRC), TrueBlue (NYSE: TBI), Dice Holdings (NYSE: DHX), Kelly Services (Nasdaq: KELYA), SFN Group (NYSE: SFN), CDI Corp. (NYSE: CDI), Cross Country Healthcare (Nasdaq: CCRN), On Assignment (Nasdaq: ASGN), AMN Healthcare Services (NYSE: AHS), Barrett Business Services (Nasdaq: BBSI), Hudson Highland Group (Nasdaq: HHGP), StarTek (NYSE: SRT), RCM Technologies (Nasdaq: RCMT), VirtualScopics (Nasdaq: VSCP), American Surgical (OTC: ASRG.OB), Medical Connections (OTC: MCTH.OB), iGen Networks (OTC: IGEN.OB), St. Joseph (OTC: STJO.OB), General Employment Enterprises (NYSE: JOB), Total Neutraceutical (OTC: TNUS.OB), TeamStaff (Nasdaq: TSTF), Stratum (OTC: STTH.OB), Purespectrum (OTC: PSRU.OB), Corporate Resource Services (OTC: CRRS.OB), Bank of America (NYSE: BAC), J.P. Morgan Chase (NYSE: JPM), Goldman Sachs (NYSE: GS), Citigroup (NYSE: C), Morgan Stanley (NYSE: MS), Wells Fargo (NYSE: WFC), TD Bank (NYSE: TD), PNC Bank (NYSE: PNC), General Electric (NYSE: GE), Wal-Mart (NYSE: WMT), McDonald's (NYSE: MCD), Alcoa (NYSE: AA), American Express (NYSE: AXP), Boeing (NYSE: BA), Caterpillar (NYSE: CAT), Cisco Systems (Nasdaq: CSCO), Chevron (NYSE: CVX), DuPont (NYSE: DD), Walt Disney (NYSE: DIS), Home Depot (NYSE: HD), Hewlett-Packard (NYSE: HPQ), IBM (NYSE: IBM), Intel (Nasdaq: INTC), Johnson & Johnson (NYSE: JNJ), Kraft (NYSE: KFT), Coca-Cola (NYSE: KO), 3M (NYSE: MMM), Merck (NYSE: MRK), Microsoft (Nasdaq: MSFT), Pfizer (NYSE: PFE), Procter & Gamble (NYSE: PG), AT&T (NYSE: T), Travelers (NYSE: TRV), United Technologies (NYSE: UTX), Verizon (NYSE: VZ), Exxon Mobil (NYSE: XOM).

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Unemployment Claims Signal Labor Recovery, but Maybe Not Consumer Spending

Something is happening in the labor market, something good even. I'm still waiting to see if it is all a dream, the Giants winning the World Series, Republicans taking back the House, and the insured unemployed count the lowest it has been in two years. That said, without government intervention to extend benefits again, consumer spending could dive in the critical fourth quarter, labor recovery or not.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

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Unemployment Claims Signal Labor Recovery, but Maybe Not Consumer Spending

This week's jobless data covering the period ended November 6 showed Weekly Initial Unemployment Claims dropped by 24K, to 435K, the lowest count in four months. Furthermore, the number of individuals receiving jobless benefits, at 4.301 million, was the lowest it has been in two years.

We cannot help but to be thrilled to report this good news, which following years of publishing warnings, feels surreal. Perhaps I am dreaming. Did the Giants really beat the Phillies and go on to win the World Series? Did the Republicans really just take back control of the House of Representatives just two years after leading the economy into near disintegration? Have I somehow slipped into a parallel universe, a bizarro world, where everything up is down and left is right? What's next, economic boom, runaway inflation and the ruination of fiat currency? Well, actually, I think yes on a couple of those. Sure glad I recommend gold ownership here a few years ago.

The latest week's unemployment insurance claims matched against the prior week's revised count of 459K. Claims have dipped below 450K before this latest dive, and each time it occurred it spurred stocks a bit. However, with claims unable to trend lower, the power of the news has been quickly lost to investors in the past. Still, perhaps what's brewing is opportunity for the real thing. Hold on though, before I get too giddy. We could be engaged in a wild war with Iran shortly, as commodity prices soar and terrorism threats convert into real attacks. Hey, barring that though, there's a chance for some more short-term profits in stocks.

We can see something happening very clearly in the four-week moving average, where initial jobless claims fell by 10K this week, to 446,500. Now that the moving average is short of 450K, it gets harder to not notice the change occurring. But perhaps it's just a matter of attrition.

Since this report measures first time filers for benefits, it cannot be attrition that is leading the data improvement. Rather, we are looking at the flow of newly unemployed into the jobless count. We all know what happens to a lake when the river flowing into it runs slower. This change in claims could help speed improvement in the unemployment pool, just by taking pressure off of it.

"...even if the unemployment rate improves on a lighter flow of newly jobless into the overall pool, consumer spending could still drop just as well."

Insured unemployment dipped another tenth of a percentage point, to 3.4% for the period ended October 30. That's good news, but let me issue another important warning, lest I be proclaimed an optimist! Uninsured unemployment is at risk of a dangerous shift higher in the near-term. Thus, even if the unemployment rate improves on a lighter flow of newly jobless into the overall pool, consumer spending could still drop just as well.

The problem is that funded unemployment insurance extensions are only in place until November 30. We assume the new Congress would not want to hamper the fourth quarter economy, which is critical for a broad segment of industries, including retail. So, while we normally would expect the government to seek to ease out of its extraordinary obligations, we hope that does not occur at this next critical juncture. Get us through Q4 Uncle Sam, and maybe we will be okay next year.

The total number of folks receiving some sort of unemployment benefit numbered a stunning 8.6 million as of October 23rd. Still, the total number of unemployed workers numbers closer to 15 million. Imagine that if the government does not extend unemployment insurance past November, somewhere around 2.3 million or so Americans will begin to lose their benefits. I base this number on the tally that existed in July, which has definitely changed some since, but probably not by much. These individuals will not be led off a cliff all at once though, however, they will be warned of the impending conclusion of their government aid. That knowledge alone will keep them from spending discretionary dollars as they prepare for the worst case scenario, unemployment without any income.

In conclusion, I expect the market will want to rally on further signs of employment gains, or less jobless flow, but if unemployment extensions find debate in Congress, that rally could be cut short or delayed until passage of favorable legislation. This would seem surely possible under the new fiscally conscious Republican Party leadership, but somehow I expect that post election actions might reflect differently then pre-voting rhetoric. At least I hope so with regard to employment insurance extensions, and let's not forget tax legislation.

FYI:

The highest insured unemployment rates in the week ending Oct. 23 were in Puerto Rico (6.1 percent), Alaska (5.2), California (4.1), Oregon (4.1), Pennsylvania (4.0), Nevada (3.9), New Jersey (3.9), Connecticut (3.6), Arkansas (3.5), South Carolina (3.5), and Wisconsin (3.5).

The largest increases in initial claims for the week ending Oct. 30 were in California (+6,387), Kentucky (+2,901), Wisconsin (+2,644), Oregon (+2,296), and Indiana (+1,920), while the largest decreases were in Florida (-3,450), South Carolina (-2,401), Illinois (-997), Georgia (-923), and Pennsylvania (-897).



Article should interest investors in Paychex (Nasdaq: PAYX), Manpower (NYSE: MAN), Robert Half International (NYSE: RHI), 51Job Inc. (Nasdaq: JOBS), Monster World Wide (NYSE: MWW), Korn/Ferry International (NYSE: KFY), Administaff (NYSE: ASF), Kforce (Nasdaq: KFRC), TrueBlue (NYSE: TBI), Dice Holdings (NYSE: DHX), Kelly Services (Nasdaq: KELYA), SFN Group (NYSE: SFN), CDI Corp. (NYSE: CDI), Cross Country Healthcare (Nasdaq: CCRN), On Assignment (Nasdaq: ASGN), AMN Healthcare Services (NYSE: AHS), Barrett Business Services (Nasdaq: BBSI), Hudson Highland Group (Nasdaq: HHGP), StarTek (NYSE: SRT), RCM Technologies (Nasdaq: RCMT), VirtualScopics (Nasdaq: VSCP), American Surgical (OTC: ASRG.OB), Medical Connections (OTC: MCTH.OB), iGen Networks (OTC: IGEN.OB), St. Joseph (OTC: STJO.OB), General Employment Enterprises (NYSE: JOB), Total Neutraceutical (OTC: TNUS.OB), TeamStaff (Nasdaq: TSTF), Stratum (OTC: STTH.OB), Purespectrum (OTC: PSRU.OB), Corporate Resource Services (OTC: CRRS.OB), Bank of America (NYSE: BAC), J.P. Morgan Chase (NYSE: JPM), Goldman Sachs (NYSE: GS), Citigroup (NYSE: C), Morgan Stanley (NYSE: MS), Wells Fargo (NYSE: WFC), TD Bank (NYSE: TD), PNC Bank (NYSE: PNC), General Electric (NYSE: GE), Wal-Mart (NYSE: WMT), McDonald's (NYSE: MCD), Alcoa (NYSE: AA), American Express (NYSE: AXP), Boeing (NYSE: BA), Caterpillar (NYSE: CAT), Cisco Systems (Nasdaq: CSCO), Chevron (NYSE: CVX), DuPont (NYSE: DD), Walt Disney (NYSE: DIS), Home Depot (NYSE: HD), Hewlett-Packard (NYSE: HPQ), IBM (NYSE: IBM), Intel (Nasdaq: INTC), Johnson & Johnson (NYSE: JNJ), Kraft (NYSE: KFT), Coca-Cola (NYSE: KO), 3M (NYSE: MMM), Merck (NYSE: MRK), Microsoft (Nasdaq: MSFT), Pfizer (NYSE: PFE), Procter & Gamble (NYSE: PG), AT&T (NYSE: T), Travelers (NYSE: TRV), United Technologies (NYSE: UTX), Verizon (NYSE: VZ), Exxon Mobil (NYSE: XOM).

Today's earnings schedule is highlighted by news from Cisco Systems (Nasdaq: CSCO), Macy's (NYSE: M), Polo Ralph Lauren (NYSE: RL), Computer Sciences (NYSE: CSC), Aegean Maritime Petroleum (NYSE: ANW), Antares Pharma (AMEX: AIS), Advance Auto Parts (NYSE: AAP), Allianz SE (OTC: AZSEY.PK), Cache (Nasdaq: CACH), Cellcom Israel (NYSE: CEL), China Agritech (Nasdaq: CAGC), China Green Material Tech (Nasdaq: CAGM), China Marine Food (Nasdaq: CMFO), China Medicine (Nasdaq: CHME), China Sky One Medical (Nasdaq: CSKI), Credit Agricole (Paris: ACA.PA), Edgar Online (Nasdaq: EDGR), Federal Agricultural Mortgage (NYSE: AGM), Global Ship Lease (NYSE: GSL), ING Groep (NYSE: ING), Kelly Services (Nasdaq: KELYA), Kullicke & Soffa (Nasdaq: KLIC), Maidenform Brands (NYSE: MFB), Marina Biotech (Nasdaq: MRNA), Navios Maritime Acquisition (NYSE: NNA), North American Palladium (NYSE: PAL), Rosetta Stone (NYSE: RST), Tandy Brands (Nasdaq: TBAC), Taseko Mines (NYSE: TGB), Tetra Tech (Nasdaq: TTEK), Xinyuan Real Estate (NYSE: XIN) and more.

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Increased Unemployment Lost in Employment Report Translation

Unemployment Increased!

A day late and a dollar short for Democrats now vacating their DC offices to make room for Tea Party and other Republican opportunists, the Labor Department reported jolly good news today… or so the popular press will have you believe.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

(Relative Tickers: NYSE: RHI, NYSE: KFY, NYSE: MAN, NYSE: MWW, Nasdaq: KELYA, Nasdaq: JOBS, NYSE: JOB, Nasdaq: CECO, Nasdaq: PAYX, NYSE: ASF, Nasdaq: KFRC, NYSE: TBI, NYSE: DHX, NYSE: SFN, NYSE: CDI, Nasdaq: CCRN, Nasdaq: ASGN, NYSE: AHS, Nasdaq: BBSI, Nasdaq: HHGP, NYSE: SRT, Nasdaq: RCMT, Nasdaq: VSCP, OTC: ASRG.OB, OTC: MCTH.OB, OTC: IGEN.OB, OTC: STJO.OB, OTC: TNUS.OB, Nasdaq: TSTF, OTC: STTH.OB, OTC: PSRU.OB, OTC: CRRS.OB, NYSE: BAC, NYSE: JPM, NYSE: GS, NYSE: C, NYSE: MS, NYSE: WFC, NYSE: TD, NYSE: PNC, NYSE: GE, NYSE: WMT, NYSE: MCD, NYSE: AA, NYSE: AXP, NYSE: BA, NYSE: CAT, Nasdaq: CSCO, NYSE: CVX, NYSE: DD, NYSE: DIS, NYSE: HD, NYSE: HPQ, NYSE: IBM, Nasdaq: INTC, NYSE: JNJ, NYSE: KFT, NYSE: KO, NYSE: MMM, NYSE: MRK, Nasdaq: MSFT, NYSE: PFE, NYSE: PG, NYSE: T, NYSE: TRV, NYSE: UTX, NYSE: VZ, NYSE: XOM, NYSE: DIA, NYSE: SPY, Nasdaq: QQQQ, NYSE: DOG, NYSE: SDS, NYSE: QLD, NYSE: NYX, NYSE: ICE, Nasdaq: NDAQ, NYSE: AIG, NYSE: WPO, NYSE: VTR, NYSE: CVH, NYSE: AMT, NYSE: AER, Nasdaq: AHPI, NYSE: ABR, NYSE: BZH, NYSE: BAM, Nasdaq: CADX, Nasdaq: CEDC, Nasdaq: DISH, NYSE: DRL, Nasdaq: ENSL, NYSE: FIG, NYSE: FCN, AMEX: HH, NYSE: IAG, NYSE: IEP, Nasdaq: LINTA, Nasdaq: NATH, Nasdaq: NVAX, Nasdaq: REVU, Nasdaq: RAND, Nasdaq: ROSE, NYSE: TSG, NYSE: SUP, NYSE: TTI, NYSE: TM, Nasdaq: YRCW)

Increased Unemployment Lost in Employment Report Translation

Nonfarm Payrolls climbed by 151,000, exceeding both the economists' consensus forecast for 60K and the top end of the forecast range at 97K (based on Bloomberg's survey). Still, unemployment stuck at 9.6%, souring the soup a bit. Furthermore, a closer look at the data shows underemployment still at 17%. Meanwhile, the unemployed count actually increased in October, while the size of the labor force conspicuously declined. If this is good news, I have to reevaluate where I fit in this weird world. The report is definitely not overwhelmingly positive.

The Employment Report for October 2010 blew economists out of the water Friday with a blowout jobs creation figure. The nation's economists expected a positive result, given census workers are now long gone and cannot skew the headline figure any longer (they cost 5K jobs this month). Nonetheless, as the President restated, private nonfarm payrolls (thus excluding government jobs) jumped by 159K, and are up 1.1 million since December. In fact, October marked the 10th straight month of private sector job growth, and four months above the 100K level - the first time for this in four years. But keep reading…

Job additions were mainly driven by the service sector, which we remind you makes up 90% of American GDP these days. Private services industries added 154K jobs on net in October, with Retail Trade adding 27,900 ahead of the start of the holiday shopping season. Wholesale Trade contributed another 7,300. Professional and Business Services contributed 46,000, reinforcing data offered by the Monster Employment Index earlier this week. If the service sector is ready to grow now, then we would have something to be thankful for later this month besides a tasty turkey. The feeling has been that employment would have to improve some first, but it seems possible that the hangover from the real estate & related exotic investment instruments bubble contributed some to consumer malaise. Perhaps Americans are finally starting to feel normal again.

There was some sour news within the services sector though. Financial Activities for one, shed another 1,000 jobs; sorry friends, Wall Street is not inviting you back to the party just yet. Transportation and Warehousing data from the Establishment Survey disagreed with news we received from Monster Worldwide (NYSE: MWW); those jobs were not found in this data. Neither did Information (IT) contribute to the spike this month. And within Professional and Business Services, which we celebrated above, most of those jobs were found in the Temporary Help category. That is a good thing, since this is where the baby is born, but it's also troublesome that companies are not ready to make long-term commitments yet.

There was a weird twist to the news out of the goods producing group. Construction actually added 5,000 jobs in October, while Manufacturing, which was an early driver of economic recovery, followed our old forecast for softness and shed 7,000 jobs last month. Note that this news conflicted with data released earlier in the week from ISM. But manufacturing looks to be getting enough lift from export demand to keep it revving. Motor Vehicle & Parts makers added 3.3 million jobs, but Durable Goods makers shed 3K jobs in aggregate. Nondurables Makers cut 4K jobs in October.

Education and Health Services added 53,000 jobs, with 34K of those coming from the Healthcare and Social Assistance sectors. In other less followed groups, Mining & Logging added 7K jobs, while Leisure & Hospitality shed 5K.

Another positive that might be overlooked today was the tenth of an hour increase in private nonfarm payroll hours worked, taking the eater of capacity to 34.3 hours per week. As this figure increases, pressure rises on companies to add workforce. Industrial Capacity Utilization has been recovering of late, but still has plenty of leeway. That said, today's news is still enthusing. Over the past 12 months, this important barometer has increased by 1.7%.

Despite the improvement in the rate of job creation, the unemployment rate stuck stubbornly at 9.6%. All signs point to a slow grind toward mid-single digit unemployment, which is unfathomable at this point. It could take years before we see anything near the sub-5% rate of unemployment enjoyed for most of the last decade, if we ever see it again.

Part-timers who would rather be working full-time hours fell by 318K in October, to sit now at a still too high 9.154 million. That figure is not that far off from the prior year count, which measured a horrible atmosphere. Another 2.602 million people (up from 2.548 million in September) are counted in a category labeled "marginally attached" to the labor force, and are excluded from the unemployment rate. Within this group, there were some 1.219 million Americans (up from 1.209 Mln.) labeled "discouraged workers," because they believe there are currently no jobs available for them.

Underemployment Rate

We have been a pioneer in the reporting of the "Underemployment Rate," which perhaps we coined. There was another metric that made less sense to us, which preceded this metric; we tweaked the number to develop the Underemployment measure you find here monthly (and everywhere else now too). The math follows:

Our underemployment figure includes part-timers who would rather be working full-time. This adjustment also adds back "discouraged" and marginally attached workers, who are not counted as part of the workforce or unemployed. If we add back the 2.602 million displaced workers to the labor market, and include the 9.154 million underemployed part-timers in the unemployed count, adjusted unemployment reaches ((14.843M + 2.602M + 9.154M) / (153.904M + 2.602M)) * 100 = 17.0 %. That's down slightly from September's 17.1% rate, but compares poorly to the 16.7% measured in August; 16.5% in July and June; 16.6% in May; 17.1% in April; 16.9% in March; 16.8% in February; and 16.4% in January.

Adding insult to injury, the count is favorably impacted by a decrease in the labor workforce to 153,904,000 from 154,158,000 in September. Meanwhile, the total number of unemployed Americans increased in October to 14,843,000, from 14,767,000. This while some 9 million plus Americans are barely making enough to pay their bills working part-time, and another 2.6 million have given up altogether. Even without the contradiction shown here and the conspicuous change to the labor force, the situation remains intolerable. This report might have helped some Democrats keep their jobs, but let's be clear: it does not depict good news.



Article should interest investors in Paychex (Nasdaq: PAYX), Manpower (NYSE: MAN), Robert Half International (NYSE: RHI), 51Job Inc. (Nasdaq: JOBS), Monster World Wide (NYSE: MWW), Korn/Ferry International (NYSE: KFY), Administaff (NYSE: ASF), Kforce (Nasdaq: KFRC), TrueBlue (NYSE: TBI), Dice Holdings (NYSE: DHX), Kelly Services (Nasdaq: KELYA), SFN Group (NYSE: SFN), CDI Corp. (NYSE: CDI), Cross Country Healthcare (Nasdaq: CCRN), On Assignment (Nasdaq: ASGN), AMN Healthcare Services (NYSE: AHS), Barrett Business Services (Nasdaq: BBSI), Hudson Highland Group (Nasdaq: HHGP), StarTek (NYSE: SRT), RCM Technologies (Nasdaq: RCMT), VirtualScopics (Nasdaq: VSCP), American Surgical (OTC: ASRG.OB), Medical Connections (OTC: MCTH.OB), iGen Networks (OTC: IGEN.OB), St. Joseph (OTC: STJO.OB), General Employment Enterprises (NYSE: JOB), Total Neutraceutical (OTC: TNUS.OB), TeamStaff (Nasdaq: TSTF), Stratum (OTC: STTH.OB), Purespectrum (OTC: PSRU.OB), Corporate Resource Services (OTC: CRRS.OB), Bank of America (NYSE: BAC), J.P. Morgan Chase (NYSE: JPM), Goldman Sachs (NYSE: GS), Citigroup (NYSE: C), Morgan Stanley (NYSE: MS), Wells Fargo (NYSE: WFC), TD Bank (NYSE: TD), PNC Bank (NYSE: PNC), General Electric (NYSE: GE), Wal-Mart (NYSE: WMT), McDonald's (NYSE: MCD), Alcoa (NYSE: AA), American Express (NYSE: AXP), Boeing (NYSE: BA), Caterpillar (NYSE: CAT), Cisco Systems (Nasdaq: CSCO), Chevron (NYSE: CVX), DuPont (NYSE: DD), Walt Disney (NYSE: DIS), Home Depot (NYSE: HD), Hewlett-Packard (NYSE: HPQ), IBM (NYSE: IBM), Intel (Nasdaq: INTC), Johnson & Johnson (NYSE: JNJ), Kraft (NYSE: KFT), Coca-Cola (NYSE: KO), 3M (NYSE: MMM), Merck (NYSE: MRK), Microsoft (Nasdaq: MSFT), Pfizer (NYSE: PFE), Procter & Gamble (NYSE: PG), AT&T (NYSE: T), Travelers (NYSE: TRV), United Technologies (NYSE: UTX), Verizon (NYSE: VZ), Exxon Mobil (NYSE: XOM). Today’s EPS report list highlights news from American International Group (NYSE: AIG), Washington Post (NYSE: WPO), Ventas (NYSE: VTR), Coventry Health Care (NYSE: CVH), American Tower (NYSE: AMT), AerCap Holdings (NYSE: AER), Allied Healthcare (Nasdaq: AHPI), Arbor Realty Trust (NYSE: ABR), Beazer Homes (NYSE: BZH), Brookfield Asset Management (NYSE: BAM), Cadence Pharmaceuticals (Nasdaq: CADX), Central European Distribution (Nasdaq: CEDC), Dish Network (Nasdaq: DISH), Doral Financial (NYSE: DRL), Entech Solar (Nasdaq: ENSL), Fortress Investment (NYSE: FIG), FTI Consulting (NYSE: FCN), Hooper Holmes (AMEX: HH), IAMGold (NYSE: IAG), Icahn Enterprises (NYSE: IEP), Liberty Media (Nasdaq: LINTA), Nathan’s Famous (Nasdaq: NATH), Novavax (Nasdaq: NVAX), Princeton Review (Nasdaq: REVU), Rand Capital (Nasdaq: RAND), Rosetta Resources (Nasdaq: ROSE), Sabre Holdings (NYSE: TSG), Superior Industries (NYSE: SUP), TETRA Tech (NYSE: TTI), Toyota (NYSE: TM) and YRC Worldwide (Nasdaq: YRCW).

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Employment Report Preview - October 2010

Jobs Report Forecast

Over the course of the last two days we've received several employment data points that help us to form expectations heading into the Labor Department's Employment Situation Report, which is due Friday morning. Economists are looking for unemployment to stick at 9.6%, and nonfarm payrolls to increase by 60K when October's jobs data is reported. However, we think that a negative report would produce little threat to the trend of stocks in the near-term, which should tend higher. A positive data point, which is more likely as economic growth progresses, should only support stocks. The only threat is that this might all already be priced in, but we viewed today's nonaction by the ECB and BOE as catalyst for further market rise (see our other reports).

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

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Employment Report Preview

This morning's economic releases offered a counter perspective to better data released yesterday. Investors have, therefore, been left confused. Fear not though dear readers, as none of it may matter now that QE2 has been set forth. Economists will likely discount any poor news tomorrow as a result, and so good news can only be supportive to the rally already begun two months ago on the shoulders of QE2 and Republican Congressional victory. Thus, we see little risk heading into Friday's release.

Unemployment Insurance Claims

Weekly Jobless Claims were reported Thursday for the week ended October 30, and as we noted earlier this morning in our premarket report, claims spiked back up above the 450K mark. At 457K, the news soured market hopes, lifted last week by the report noting claims had fallen to 437K (revised from 434K). Economists were looking for 443K this time around, but these weekly forecasts are usually useless, and we recommend you ignore them.

The four-week moving average for the weekly claims figure helps us find truer direction. This week's check on the average shows it increased by 2,000, to 456K. The insured unemployment rate, for the period ended October 23rd, dipped a tenth of a point to 3.4%. Some 42K less folks were receiving benefits as of the 23rd, but 4.34 million still were. Do not get too excited by the change in this count, as it leaves out more than two-thirds of the overall unemployed pool, which in September numbered 14.8 million. Furthermore, this excludes the "underemployed," or those folks working part-time jobs who would rather be working full-time, and also the disenchanted, who have given up hope altogether.

Not much changed in September or October as far as the weekly jobless numbers run, and so we cannot really look forward to much positive change in the Employment Report. Still, we can read modest positive into the outlook, given the declining number of insured unemployed. Keep in mind though, that laborers may simply be moving into part-time work, which would not change underemployment, nor would it impact consumer spending in a significant enough manner.

We regularly like to pass on the following data for your informational purposes and individual use:

The highest insured unemployment rates in the week ending Oct. 16 were in Puerto Rico (5.8 percent), Alaska (5.0), California (4.1), Oregon (4.1), Pennsylvania (4.1), New Jersey (3.9), Nevada (3.7), Connecticut (3.6), Wisconsin (3.6), Arkansas (3.5), and South Carolina (3.5).

The largest increases in initial claims for the week ending Oct. 23 were in California (+3,755), Illinois (+3,710), Pennsylvania (+2,256), Georgia (+1,593), and Michigan (+1,480), while the largest decreases were in Kentucky (-1,699), Florida (-1,615), Puerto Rico (-1,153), Indiana (-1,095), and Alabama (-1,087).

Monster Employment Index (MEI)

Monster World Wide (NYSE: MWW) reported on online job demand this morning, and the trend matched the message offered by several other data points recently. It was that same old "bouncing around the bottom," as the October MEI fell two points, to a reading of 136. The MEI sat at 136 as recently as August, but had run to as high as 141 in June. Though the reading slipped against September, it was still worlds apart from the environment that existed last year, when it stood at 120. The MEI reached its 12-month low of 114 in January of this year.

What does this all mean? Generally, it says the number of available positions found via online databases has slipped some, though not much. We would prefer to see more jobs available of course, but this data alone does not threaten new recession or higher unemployment. Neither does it offer hope for much improvement in the labor market. Remember, however, that employment is a lagging indicator. Though this time around, it is an anchor to economic recovery, causing significant drag and keeping V-shaped recovery from the probability equation completely. It is, therefore, acting as a leading indicator or obstacle.

During October, online job availability rose in 10 of the Index's 20 industry sectors and in eight of the 23 occupational categories monitored by Monster. That means it did not rise in the other 10 sectors and other 15 occupational categories. In fact, it may very well have fallen in those other sectors.

Monster reports that job demand improved in trade and related sectors. The most notable gains came in transportation and warehousing, as that business showed growth in job demand to its highest level of the year. This is probably a beneficiary of soft dollar policy and rising export demand.

The report indicates that online recruitment activity expanded for both the wholesale trade and retail trade sectors, and Monster notes that other consumer-driven groups, like accommodation and food services and arts, entertainment, and recreation, were relatively stable over the longer term.

It seems Monster sees or is trying to portray a better consumer mood and activity than we've generally seen represented in data, excluding today's Chain Store Sales which we've yet to review. It's common knowledge and general consensus that economic growth should persist, excluding the Iran event (which sure seems likely to occur before long). What we cannot read from here is whether solid traction is available below the mud we currently trudge through.

Monster reported, "Among occupations, year-over-year demand trends moved upward for legal and computer-related professionals, as exhibited by the annual growth in the broader information; and finance and insurance industries. Online job demand was relatively tempered for most other white-collar occupations."

I can see why legal opportunities have increased, given all the lawsuits filed against debt burdened Americans who cannot manage to pay their bills anymore. It is a shame how much pressure intensifies upon people already knocked to their knees, and the vipers and crows will find their true justice some other day for their hard-balling poor folks. I get the jobs in legal, but in finance? Really? Maybe corporate finance, but we have not seen any change in capital markets opportunities as yet.

Arizona recorded the highest annual increase in job opportunities as far as states go (boy could that real estate market use it too), while Portland and Boston looked hot for metropolitan regions. Washington D.C. was the only city to record an annual decrease in job opportunities. Hey, we thought all those House seats were simply turned over to new representatives. Bad news Charlie! Maybe they fired the guy who sweeps discrepancies under the rug. All in all, only 13 of the 28 metro markets measured saw increased job opportunities in October. State wise, the most job opportunities per capita existed in: Delaware, Alaska, Arizona, Vermont, Montana, Connecticut, Maryland, Rhode Island, Wyoming, and Virginia.

Challenger's Job-Cuts Report

Job cuts occur even when the economy is growing, and so this report is not likely to help much in forecasting labor market gains. However, it does offer some insight and even reason to cheer. In its latest report, Challenger noted October announced layoffs of 37,986. That compared with September's 37,151. More importantly, employers have declared 62% less layoffs this year-to-date, versus the comparable period from a year ago.

The most cuts last month came in the entertainment and leisure sector, as one should expect. Boardwalks are not as busy along the Northeast Coastline once Labor Day passes, and local amusement parks also see less traffic once school starts. Unfortunately, government and non-profit jobs have been going by the way side, and that continued last month (-4,749 cuts). This was the lowest such count since January though, but given stresses remaining on state and municipalities, and the dearth of coins for tin cans, this group should continue to struggle. Still, the pace of these cuts has improved, so perhaps the discrepancy sweeper can keep his job after all.

What we can take from all this is that perhaps we have hit rock bottom, or at least a safe plateau, as far as jobs go. We are operating at a point where few firings will occur barring new catalyst against economic activity. In other words, the bleeding has stopped, though partly because we almost ran out of blood.

ADP Private Employment Report

ADP's monthly data point comes closest to representing the change depicted in the following day's Labor Department report. ADP reported its estimate for private nonfarm payrolls for the month of October yesterday, and the news was moderately positive. According to ADP, private sector jobs likely increased on net by 43K in October. At first blush, that is not exciting news, but September's data showed a decline of 2K jobs, and that was revised from a drop of 39K.

It is not as if the trend in jobs has shown steady rise though. In fact, since the job market first showed improvement in February, this monthly report has offered readings ranging from a -2K to +65K. October's mark sits just off the average change since February, which is +34K.

In Conclusion

Given that the Labor Department report will finally be rid of the effect of the shedding of census workers and related large public sector cuts, we are almost guaranteed to see an increase in jobs Friday. In fact, economists forecast nonfarm payrolls increased by 60K last month, based on Bloomberg's survey. Economists' forecasts range from -2K to +97K, so just about nobody is looking for a dip in the labor market here. Unemployment is forecast to sit at 9.6%. There is no forecast for the Underemployment Rate, but we remind you that it deteriorated in September, to 17.1%, from 16.7% in August. We think there is a good chance it will moderate a bit here. So, with an hour left to trade, The Greek would be a buyer into any late day weakness that might come on fear of the Employment Report.



Article should interest investors in Paychex (Nasdaq: PAYX), Manpower (NYSE: MAN), Robert Half International (NYSE: RHI), 51Job Inc. (Nasdaq: JOBS), Monster World Wide (NYSE: MWW), Korn/Ferry International (NYSE: KFY), Administaff (NYSE: ASF), Kforce (Nasdaq: KFRC), TrueBlue (NYSE: TBI), Dice Holdings (NYSE: DHX), Kelly Services (Nasdaq: KELYA), SFN Group (NYSE: SFN), CDI Corp. (NYSE: CDI), Cross Country Healthcare (Nasdaq: CCRN), On Assignment (Nasdaq: ASGN), AMN Healthcare Services (NYSE: AHS), Barrett Business Services (Nasdaq: BBSI), Hudson Highland Group (Nasdaq: HHGP), StarTek (NYSE: SRT), RCM Technologies (Nasdaq: RCMT), VirtualScopics (Nasdaq: VSCP), American Surgical (OTC: ASRG.OB), Medical Connections (OTC: MCTH.OB), iGen Networks (OTC: IGEN.OB), St. Joseph (OTC: STJO.OB), General Employment Enterprises (NYSE: JOB), Total Neutraceutical (OTC: TNUS.OB), TeamStaff (Nasdaq: TSTF), Stratum (OTC: STTH.OB), Purespectrum (OTC: PSRU.OB), Corporate Resource Services (OTC: CRRS.OB), Bank of America (NYSE: BAC), J.P. Morgan Chase (NYSE: JPM), Goldman Sachs (NYSE: GS), Citigroup (NYSE: C), Morgan Stanley (NYSE: MS), Wells Fargo (NYSE: WFC), TD Bank (NYSE: TD), PNC Bank (NYSE: PNC), General Electric (NYSE: GE), Wal-Mart (NYSE: WMT), McDonald's (NYSE: MCD), Alcoa (NYSE: AA), American Express (NYSE: AXP), Boeing (NYSE: BA), Caterpillar (NYSE: CAT), Cisco Systems (Nasdaq: CSCO), Chevron (NYSE: CVX), DuPont (NYSE: DD), Walt Disney (NYSE: DIS), Home Depot (NYSE: HD), Hewlett-Packard (NYSE: HPQ), IBM (NYSE: IBM), Intel (Nasdaq: INTC), Johnson & Johnson (NYSE: JNJ), Kraft (NYSE: KFT), Coca-Cola (NYSE: KO), 3M (NYSE: MMM), Merck (NYSE: MRK), Microsoft (Nasdaq: MSFT), Pfizer (NYSE: PFE), Procter & Gamble (NYSE: PG), AT&T (NYSE: T), Travelers (NYSE: TRV), United Technologies (NYSE: UTX), Verizon (NYSE: VZ), Exxon Mobil (NYSE: XOM).

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Jobless Claims Show Anchored Unemployment

Just when we thought we might be catching a break, this unforgiving recession reminds us she is sticking around a while. Jobless claims had only just dipped below the psychologically important 450K mark, and offered hope of moving toward 400K. However, optimists were slapped in the face today by reality, as new benefits filers were reported higher last week. Or was it just the census crew coming in for their checks?

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

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Jobless Claims Show Anchored Unemployment

If ever we saw an indicator of anchored unemployment, we did today. Weekly Jobless Claims for the week ended October 9 increased by 13,000, to 462K. The prior week’s result was also revised upwards, to 449K, from 445K. Economists were stymied, since they were looking for a reading of 443K. Heck, even we were duped into thinking things might finally be flattening out at least. Nope! Nada! We're still stuck in the mud, or rather, anchored.

This latest result broke a streak of six straight declines in the four-week moving average for claims, which increased by 2,250 in the latest period, to 459K. Still, we can take some comfort in the fact that the latest period's claims count was not far above the four-week average. Perhaps this will prove just a short-term dip, and it may be due to census workers, recently let go, finding their way to another type of government check.

The insured unemployment rate dipped a tenth of a point to 3.5% for the October 2 period, but that was only after the prior week was revised back up to 3.6%. In other words, if you're celebrating this, I'm sorry to tell you that it's the same news we partied about last week. Still, the insured unemployed count dipped by 112K in the October 2 period, which is good news, at least for those folks. Well, if they got a job it is anyway; if they died, that's another story…

FYI:

The highest insured unemployment rates in the week ending Sept. 25 were in Puerto Rico (6.3%), Alaska (4.5), California (4.0), Nevada (4.0), Oregon (4.0), Pennsylvania (4.0), New Jersey (3.9), Connecticut (3.6), Illinois (3.6), and South Carolina (3.5).

The largest increases in initial claims for the week ending Oct. 2 were in Pennsylvania (+2,869), New Jersey (+2,132), Georgia (+1,361), Indiana (+833), and Washington (+677), while the largest decreases were in California (-6,131), Florida (-5,357), Iowa (-817), Illinois (-746), and Puerto Rico (-578).

Extended benefits were available in Alabama, Alaska, Arizona, California, Colorado, Connecticut, Delaware, the District of Columbia, Florida, Georgia, Idaho, Illinois, Indiana, Kansas, Kentucky, Maine, Massachusetts, Michigan, Minnesota, Missouri, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Oregon, Pennsylvania, Puerto Rico, Rhode Island, South Carolina, Tennessee, Texas, Virginia, Washington, West Virginia, and Wisconsin during the week ending Sept. 25.



Article should interest investors in Paychex (Nasdaq: PAYX), Manpower (NYSE: MAN), Robert Half International (NYSE: RHI), 51Job Inc. (Nasdaq: JOBS), Monster World Wide (NYSE: MWW), Korn/Ferry International (NYSE: KFY), Administaff (NYSE: ASF), Kforce (Nasdaq: KFRC), TrueBlue (NYSE: TBI), Dice Holdings (NYSE: DHX), Kelly Services (Nasdaq: KELYA), SFN Group (NYSE: SFN), CDI Corp. (NYSE: CDI), Cross Country Healthcare (Nasdaq: CCRN), On Assignment (Nasdaq: ASGN), AMN Healthcare Services (NYSE: AHS), Barrett Business Services (Nasdaq: BBSI), Hudson Highland Group (Nasdaq: HHGP), StarTek (NYSE: SRT), RCM Technologies (Nasdaq: RCMT), VirtualScopics (Nasdaq: VSCP), American Surgical (OTC: ASRG.OB), Medical Connections (OTC: MCTH.OB), iGen Networks (OTC: IGEN.OB), St. Joseph (OTC: STJO.OB), General Employment Enterprises (NYSE: JOB), Total Neutraceutical (OTC: TNUS.OB), TeamStaff (Nasdaq: TSTF), Stratum (OTC: STTH.OB), Purespectrum (OTC: PSRU.OB), Corporate Resource Services (OTC: CRRS.OB), Bank of America (NYSE: BAC), J.P. Morgan Chase (NYSE: JPM), Goldman Sachs (NYSE: GS), Citigroup (NYSE: C), Morgan Stanley (NYSE: MS), Wells Fargo (NYSE: WFC), TD Bank (NYSE: TD), PNC Bank (NYSE: PNC), General Electric (NYSE: GE), Wal-Mart (NYSE: WMT), McDonald's (NYSE: MCD), Alcoa (NYSE: AA), American Express (NYSE: AXP), Boeing (NYSE: BA), Caterpillar (NYSE: CAT), Cisco Systems (Nasdaq: CSCO), Chevron (NYSE: CVX), DuPont (NYSE: DD), Walt Disney (NYSE: DIS), Home Depot (NYSE: HD), Hewlett-Packard (NYSE: HPQ), IBM (NYSE: IBM), Intel (Nasdaq: INTC), Johnson & Johnson (NYSE: JNJ), Kraft (NYSE: KFT), Coca-Cola (NYSE: KO), 3M (NYSE: MMM), Merck (NYSE: MRK), Microsoft (Nasdaq: MSFT), Pfizer (NYSE: PFE), Procter & Gamble (NYSE: PG), AT&T (NYSE: T), Travelers (NYSE: TRV), United Technologies (NYSE: UTX), Verizon (NYSE: VZ), Exxon Mobil (NYSE: XOM).

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Complicated Employment Situation Report Breaks Down to Trouble

The latest Employment Situation Report for September required some dissection before coming to conclusion on the cause of death. While nonfarm payrolls disappointed most, the details offered mixed information. Meanwhile, the unemployment rate seemed to calm concerns, but a closer look at the underemployment rate raises alarm.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

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Employment Situation Report

The Employment Situation Report is confusing to the Main Street economist from the get-go, as the top-line measures of labor market health offered a mixed message. The unemployment rate stuck at 9.6%, rather than deteriorating to 9.7%, as economists expected. Meanwhile, Nonfarm Payrolls dropped by a net of 95,000 in September, which, in this case, matched poorly against expectations for decline of just 8,000 jobs. On one hand, we find what seems like good news and in the other we catch a palm full of trouble. As we work through the report here for you, we expect to clear up the finer points and reveal the general message. We hope this will be an aid to your general understanding of the employment situation and to your investment and business planning strategy.

Starting with the payroll numbers, the reported loss of 95K jobs is a bit misleading. For the final occasion, it included a significant number of census workers who were hired not long ago on a temporary basis. The layoffs of 77K tally-takers last month were expected and therefore also forecast, and so you must be wondering why and how economists could still be so far off in their predictions. Well, the reason was hinted to by the President just a day before the release.

President's Sneak Peak

We broke the news Thursday of the President's allusion to September private payroll growth during a stump speech he gave in Bowie, Maryland. We said that since he likely had a sneak peak at the labor market data, his comment regarding the private workforce was probably an allusion to another solid private payroll count for September. We were correct in that assumption. Private payrolls increased by 64,000 in September, not far off economists' views for +85K (ADP saw +39K). This marked the ninth consecutive month of job growth in the private sector. However, we missed another of President Obama's important clues.

The Education Warning

The President keyed on education in his Bowie address. He pumped up Maryland's governor for his state's nation leading education record, and he highlighted the general view that Republicans would seek to cut education spending if elected into control of Congress and to the governor's seat in Maryland. Why the focus on education? We thought it was clear, as the President told a college crowd that Democrats would rather let tax breaks expire for those making more than $250K than fire teachers, as has occurred in Republican led New Jersey and California. However, the broader scheme became more clear Friday morning, when we saw the payroll count affected significantly by a sharp drop of 76K public employees from local government municipalities. These job cuts were attributed to the layoffs of teachers and other government employees, as states sought to balance tight budgets.

“We want to know! Where did our money go?”

So the President was implying even more than we thought we had insightfully uncovered Thursday. He effectively told us there would be growth in the private payroll count again, a positive sign for the economy, but also that local governments would make significant cuts to teachers. So now we want to know what happened to the bill signed into law on August 12, through which the federal government issued $26 billion to states so that they would keep teachers in place? Wasn't it enough money? If not, why didn't the bill call for more funding? Or were the funds misdirected or misused? We want know! Where did our money go?

With regard to the public payroll count, with census workers now limited to about 6K, the pool will no longer fog the overall monthly number. Likewise, further changes in the number of employed teachers should be minimal, given school is now in session. Still, states and municipalities remain under pressure to balance budgets, and further job cuts are likely from the public sector generally speaking.

Private Job Market

Still, there was more good news with regard to the private payroll count, which one might view as the parent labor market, given public jobs are only possible due to tax collection from private employees (and public). The prior two months' private nonfarm payroll counts were revised higher, to 93K for August (from 67K) and 117K for September (from 107K). That said, the trend still shows a slowing pace of job creation in the private sector. Adding to that burning of the toast, the government's benchmark revisions appear set to adjust nonfarm payroll losses by another -366K for March 2010.

It seems like these adjustments keep clarifying a tougher economic situation than upon first data declaration. I'm having a hard time defending the honesty of my government, given the consistent favorable lean of data to whichever Administration is in place (I saw it under Bush and I see it now too). However, I believe it is an issue that does not reach to the upper echelon of government, and it may simply be due to human error in any or each case.

Health Care Adds Jobs

The details of the payroll data reveal the Health Care sector again contributed job opportunities, adding a net +24K in September. Indeed, the demographics of our nation have offered health care professionals steady work. Bars and restaurants also added a bunch new servers in September (+34K), as more Americans drown their sorrows and burn some savings. The same cannot be said for most other employment sectors.

Construction Dives While Bars Thrive

Construction entered a renaissance of job destruction, shedding 21K jobs this month, which net well against a similar numerical gain in August. Earlier this week, we expressed our view that construction job losses must be in the commercial space, given the dearth of any residential activity. The Labor Department's report highlighted the location of these cuts in nonresidential specialty trade (electricians, plumbers and heating and air conditioning specialists we assume). Hey, I know these guys personally, given my 14 year carpentry apprenticeship under my father. These guys might single-handedly be behind the increase in bar traffic implied by establishment job increases.

Temporary Work

Finally, temporary help increased by 16.9K in September, but we cannot classify this as a positive, as the temp workforce is expected by most to give way for permanent hires if the economy gains true traction. This is the general view, but I expect both the temporary workforce and permanent workforce to grow simultaneously this time around, given the degree of cuts that have taken place (low levels of staffing are in place).

Underemployment Deteriorated

The Household Survey showed the unemployment rate held steady, but we all know how that goes… Get this! Unemployment stuck at 9.6% in September, but the number of part-timers working fewer than the full-time hours they would like and need to be working, increased by some 612,000 last month. Meanwhile, the Marginally Attached count, which includes folks who are not sure they can get a job anymore, rose by 178K. So guess what happened to the underemployment rate then… it increased to 17.1%, from 16.7% in August. That is a significant change. Thus, the number of folks not spending as they usually might is high and growing.

Our underemployment figure includes part-timers who once worked full-time, in the count. This adjustment also adds back "discouraged" and marginally attached workers, who are not counted as part of the workforce or unemployed. If we add back the 2.548 million displaced workers to the labor market, and include the 9.472 million underemployed part-timers in the unemployed count, adjusted unemployment reaches ((14.767M + 2.548M + 9.472M) / (154.158M + 2.548M)) * 100 = 17.1%. That's greater than the 16.7% recorded in August, and compares to 16.5% in July and June; 16.6% in May; 17.1% in April; 16.9% in March; 16.8% in February; and 16.4% in January.

Conclusion

So, while we will not have teachers nor census workers to blame in the future, and should see better overall nonfarm payroll counts moving forward as a result, the trend in private sector hiring is down. Meanwhile, other public sector jobs remain at risk. Also, the underemployment rate is on the rise, and spending should be likewise contained. Thus, net net, a complicated Employment Situation Report breaks down to show general trouble after its dissection.



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