Where Oh Where Are the Jobs?

The sugar high from the very positive ISM manufacturing report on Monday is fading fast. Blame it on the unemployment numbers.

The DOL report showed initial claims increasing by 8,000 to 480,000 and the four week moving average was back up to 468,750 an increase of 11,750. By the way, the four week average has increased in each of the last three weeks. Uh-oh.

If you’re looking for some why’s here, look no further than the ISM report on the service sector which came out Wednesday. Sure, it showed a slight bump up overall — from 49.8% to 50.5% — but if you look at the components, one jumps out at you. You can see it here from Jake’s post at EconomPicData.com:

The employment component increased a percentage point to 44.6%. Remember, anything under 50 represents contraction. In other words, companies are still cutting. By the way, the service sector represents 70% or so of the economy.

I don’t know why the markets didn’t pick up on this on Wednesday, maybe they just needed the DOL report to confirm that all still isn’t well. At any rate, the message appears to be sinking in.

So, we apparently have a jobs situation that despite massive government stimulus and massive assistance from the Fed, is still in the process of going the wrong way. Much of that assistance is shortly going to end. Is it any wonder that the markets are tanking? Does this look like a recovery that is on the way to organically sustaining itself?

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About Tom Lindmark 401 Articles

I’m not sure that credentials mean much when it comes to writing about things but people seem to want to see them, so briefly here are mine. I have an undergraduate degree in economics from an undistinguished Midwestern university and masters in international business from an equally undistinguished Southwestern University. I spent a number of years working for large banks lending to lots of different industries. For the past few years, I’ve been engaged in real estate finance – primarily for commercial projects. Like a lot of other finance guys, I’m looking for a job at this point in time.

Given all of that, I suggest that you take what I write with the appropriate grain of salt. I try and figure out what’s behind the news but suspect that I’m often delusional. Nevertheless, I keep throwing things out there and occasionally it sticks. I do read the comments that readers leave and to the extent I can reply to them. I also reply to all emails so feel free to contact me if you want to discuss something at more length. Oh, I also have a very thick skin, so if you disagree feel free to say so.

Enjoy what I write and let me know when I’m off base – I probably won’t agree with you but don’t be shy.

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