The Unemployment Rate Held at 9.7% in February

The widely anticipated March Unemployment Report covering the month of February 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: 10%
February: 10.1%
– March Consensus Expectation: 9.7-9.8%
– March Actual: 9.7%

Comments: as expected

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…further revised to a gain of 64k
January: loss of 85k…revised to a loss of 150k
February: loss of 20k
– March Consensus Expectation: -50k
March Actual: -36k with revision to February to -26k and revisions to January and December of +35k

Comments: the administration had aggressively managed expectations down for this number indicating the impact of the February snowstorms. In a classic case of managing expectations, when one manages down and comes in on target or close to it, then you declare victory. Standard management move often utilized by those insecure in their positions and with the data.

III. AVERAGE HOURLY EARNINGS

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

Comments: no wage growth here which plays into lack of inflation and actual disinflation, if not deflationary fears. You will not hear this, but it is a concern. The lack of wage growth is very real and does not help consumer spending.

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: 33.2 hours
February: 33.3 hours under previous definition but 33.9 hours using a revised and more broadly defined measure.
– March Consensus Expectation: 33.6
March Actual: 33.1 hours….!!!

Comments: I am looking for further clarification on this piece of data. Either way, this statistic is bad but if this stat is measured using the newly defined broader measure then it is an absolute disaster! Anybody with clarification, please feel free to chime in.

V. FURTHER COLOR: much like the color referenced in the Duke/CFO Survey I referenced yesterday, the job situation may not be getting worse but it is not showing an indication that it is getting better. If new orders were building, I think we would see it first reflected in a longer workweek.

Markets are buying the better than disaster scenario painted by the experts and have trended higher. I would prefer to look beyond the trees and wonder where and when we will start to see improvements in the workweek and wages which should happen before improvements in the actual rate and in the non-farm numbers. We will have to wait another month….and in my opinion, longer than that.

VI. MARKET REACTION

Post-report

2yr Tsy: .92%
10yr Tsy: 3.68%
DJIA : +.7%
S&P 500 : +.7%
U.S. Dollar Index: +.12%

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.

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