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
November: 10.2%…revised to 10.1%
– 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
– January Consensus Expectation: +.2%
– January Actual: .2%
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
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%