Posts filed under “Employment”

The Return of NILF

Over the years, we have mentioned on more than one occasion the not-as-dirty-as-it-sounds measure, NILF. No, it has nothing to do with moms — rather, it stands for Not In Labor Force.

It is one of the reasons the official BLS unemployment rate is actually understating the actual unemployment rate.

A quick primer on how this works: The Unemployment rate is depicted as a percentage, and like all percentages, it is actually a fraction. You take the total number of people in the labor pool, the total number of workers:

Employed Individuals
_________________    =   Percent Employed 

Total Labor Pool

Subtract the percent employed from 100% and you get the unemployment rate.

Most of us think about the unemployment rate going down due to more people getting jobs. But there’s also another way the official unemployment rate can go down. It happens when the denominator — the bottom number of the fraction — goes down.

And that is what has been occurring again recently. The Labor Pool has shrunk, making the unemployment rate look better than it actually is.   

One of the confirming signs of this is the Temporary help. It declined in May (by almost 9K), indeed, it has been declining for the past six months. These are the first employes to be laid off, and it disputes the so-called tightness or lack of slack int he labor market.

Consider the following from Liscio Report, Philippa Dunne and Doug Henwood via Barron’s Alan Abelson:

"Moreover, the so-called household report, which
bulls used to gush over until the numbers went south, registered a job
gain of only 66,000, after a drop of 70,000 in April. And it also,
comment Philippa and Doug, "showed signs of slack developing in the
labor market."

There were other indications that far from being
tight, as the bulls on the economy contend, the labor market is
manifesting some troubling trends. Folks not officially in the labor
force but who’d love a job increased by 155,000 to the "highest level
since early 2006." That suggests the real unemployment rate is over 5%.
And thousands more toilers are working part-time because they can’t
latch on to full-time jobs."

Like so many other government stats, we remain quite skeptical that the 4.5% unemployment rate corresponds to reality.


Quickie Tour
Barron’s Monday, June 4, 2007

Category: Data Analysis, Employment, Psychology

Flatlining GDP & NFP

Category: Data Analysis, Economy, Employment

Business Employment Dynamics & NFP

Category: Data Analysis, Economy, Employment, Psychology

WSJ: Overstated Job Market Strength?

Category: Data Analysis, Economy, Employment

More on NFP: More Recognition of Disbelief

Category: Data Analysis, Economy, Employment, Psychology

NFP: 88k (and I don’t believe even that)

The Payroll numbers are out, and they are not particularly pretty:

88,000 new jobs were created in April, according to BLS. This is the weakest job gain since November ’04. Cumulative revisions for prior months were to the downside by 26,000.

As expected, losses were in Manufacturing (19k), Retail (26k) and Construction (11k). The  weakness in Construction has been very uted, implying that the full impact of the housing slow down has yet to be fully realized.

Biggest gains were had in Services (116k), Education and Health (53k), Gov’t (25k) Professional (24k) and Leisure/Hospitality (22k).    

Temporary help jobs fell for a 3rd month (January was flat) making 4 consecutive months of no gains. Temp help tends to lead employment gains, and this weakness can be read as a future forecastor of employment.

We don’t pay close attention to the Household survey, (the self reported number is very volatile) but the drop of -468k was an eyebrow raiser.


Birth Death Adjustment:  A whopping 317k B/D adjustment — that is the single largest "adjustment" on record for any single given month. And despite that giant add, the number was a very soft 88k.

To put this into some context, of those 317k new jobs hypothesized by BLS, 49k of those supposed jobs are in construction. Now what are the odds of that?

While Wall Street celebrates the upcoming recession, let me remind you that this economy requires about 150k new monthly jobs to merely keeep up with population growth.

Read More

Category: Data Analysis, Economy, Employment

NFP: The Return of the Over?

Category: Data Analysis, Economy, Employment

GDP Ex Housing

Category: Data Analysis, Economy, Employment, Real Estate

Week in Preview

Category: Earnings, Economy, Employment, Markets

Housing Slowdown Sector Impact

Category: Economy, Employment, Markets, Real Estate, Retail