Unemployment Rate Still Stands at 10%

The widely anticipated January Unemployment Report covering the month of December was just released. Let’s dive right in and take a look at the numbers . . .

I. UNEMPLOYMENT RATE

August: 9.4%
September: 9.7%
October: 9.8%
November: 10.2%…revised to 10.1%
December: 10%
January Consensus Expectation: 10.0%
January Actual: 10.0%

Unchanged on the month, in line with expectations. The November rate was revised from 10.2% to 10.1%. The underemployment rate worsened to a rate of 17.3% from 17.2%. How do I read this? The rate of decline may be flattening, but there is absolutely no reason to believe this is destined to improve, especially anytime soon. The fact that the underemployment rate inched higher is a stronger sign as to the real health (or illness) of the labor market.

II. NON-FARM PAYROLL (click here for definition of this term)

July: loss of 463k
August: loss of 304k
September: loss of 154k
October: loss of 139k
November: loss of 111k…revised to a loss of 127k jobs
December: loss of 11k…revised to a gain of 4k
January Consensus Expectation: flat
– January Actual: a loss of 85k jobs

For my money, this report is decidedly worse than expected. Temporary workers grew by 47k. Government jobs declined by 21k. The positive spin being put on the December revision to a gain of 4k jobs should be looked at in the context that November’s loss was revised lower in an offsetting fashion.

III. AVERAGE HOURLY EARNINGS

August: .3%
September: .4%
October: .1%
November: .3%
December: .1%
January Consensus Expectation: +.2%
– January Actual: .2%

As expected.

IV. AVERAGE HOURLY WORKWEEK

July: 33.0 hours
August: 33.1 hours
September: 33.1 hours
October: 33.0 hours
November: 33.0 hours
December: 33.2 hours
January Consensus Expectation: 33.2 hours
– January Actual: 33.2 hours

As expected.

V. FURTHER COLOR

Why is it that I have a mental picture of the economy personified as an individual sinking to the bottom of a pool? While the distance to the bottom of that pool is lessened each and every month, once the body comes to rest at the bottom, it just sits. Can that body be pulled back and resuscitated or will it merely lie at the bottom of the pool? This month’s job report is an indication that the economy continues to be in a state of decline and likely to remain depressed.

The Fed will read this report as an indication that rates should stay unchanged for an extended period.

VI. MARKET REACTION

Post-report at 9:00am

2yr Tsy: .96%, the rate has declined by 5 basis points,
10yr Tsy: 3.79%, the rate has declined by 3 basis points
DJIA Futures: -31 points indicating a slighlty weaker opening
U.S. Dollar Index: 77.57, a decline of .35%

About Larry Doyle 522 Articles

Larry Doyle embarked on his Wall Street career in 1983 as a mortgage-backed securities trader for The First Boston Corporation. He was involved in the growth and development of the secondary mortgage market from its near infancy.

After close to 7 years at First Boston, Larry joined Bear Stearns in early 1990 as a mortgage trader. In 1993, Larry was named a Senior Managing Director at the firm. He left Bear to join Union Bank of Switzerland in late 1996 as Head of Mortgage Trading.

In 1998, after 15 years of trading and precipitated by Swiss Bank’s takeover of UBS, Larry moved from trading to sales as a senior salesperson at Bank of America. His move into sales led him to the role as National Sales Manager for Securitized Products at JP Morgan Chase in 2000. He was integrally involved in developing the department, hiring 40 salespeople, and generating $300 million in sales revenue. He left JP Morgan in 2006.

Throughout his career, Larry eagerly engaged clients and colleagues. He has mentored dozens of junior colleagues, recruited at a number of colleges and universities, and interviewed hundreds. He has also had extensive public speaking experience. Additionally, Larry served as Chair of the Mortgage Trading Committee for the Public Securities Association (PSA) in the mid-90s.

Larry graduated Cum Laude, Phi Beta Kappa in 1983 from the College of the Holy Cross.

Visit: Sense On Cents

1 Comment on Unemployment Rate Still Stands at 10%

  1. What continues to be interesting to me on the release of jobs numbers is what happens to the precious metals markets. Again this morning I was watching with the real time free app, ExactPrice ( http://www.learcapital.com/exactprice ), and they spiked when those bad numbers came out. Gold jumped almost $20 dollars.

    As far as the unemployment rate goes, I have a feeling it’s much higher than 10%. And come Feb 2 when they adjust for the “imagined” job losses of small businesses I think things are going to go crazy.

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