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May Unemployment Report

By Larry Doyle on May 8, 2009 at 10:35 AM in Current Affairs, Economy, Sense on Cents (Larry Doyle blog)

Before this morning’s numbers were released, I published:

The widely anticipated May Unemployment Report covering the month of April is due out this morning at 8:30am (EST). Will this report show signs of improving trends in the pace of layoffs? Aside from the actual report, we need to pay strict attention to the revisions for prior months to assess the overall health of “our patient.” In regard to revisions and the actual report, a month ago I had written in my post April Unemployment Report: UPDATE:

Analysts hit the numbers, as they came in as expected. Wow! Are the analysts that good or are these numbers being “managed” or “massaged” so as not to overly upset the markets? Well, we did have a significant revision to January’s report. Let’s dig deeper!!

Call me paranoid, but when a January Non-Farm Payroll number is revised from a loss of 655k jobs to 741k and no revision is provided for February, I immediately ask why.

Previous month’s data and expectations for the May report are as follows:
**Note: I have now included the actual unemployment statistics (which were released at 8:30AM), along with my post-report commentary:

Unemployment Rate
March: 8.1%
April: 8.5%
Expectation for May: 8.9% (recall how this rate was the base case used for Bank Stress Tests…and here we are hitting it in May!!)
Actual for May: 8.9%

Post-report comment: as expected . . . however, the Underemployment Rate is now 15.8%. This rate consists of those unemployed and looking for work, unemployed and have given up looking, and part-time workers who would prefer full-time. To that end, I wonder how many temporary workers in the Census Bureau would prefer full-time work.

Non-Farm Payroll (click here for definition of this term)
March: loss of 651k
April : loss of 663k
Expectation for May: loss of 600k
Actual May report: loss of 539k
Revisions: February and March combined lost another 66k jobs

Post-report comment: on the face, the report appears better than expected but given the additional job losses in the revised numbers for February (an additional 18k jobs) and March (an additional 48k jobs) we are still in the 600k average job loss for the month. Private sector lost 611k jobs while government added 72k jobs with a lot of those people being temporary workers employed by the Census Bureau. The fact that temporary government workers are factored into overall employment, in my opinion, is stretching the integrity of the report. Health care added 17k jobs, manufacturing lost 149k jobs, construction lost 110k jobs, financial services lost 40k jobs.

As I referenced above, I will be looking for a February revision as well.

Average Hourly Earnings
March: +.2
April : +.2
Expectation for May: +.2
Actual May report: +.1

Post-report comment: businesses are doing everything to manage costs. This number is lower than expected and will not help consumer spending and retail sales going forward. With no wage pressures, this component of inflation will remain in check

Average Hourly Workweek
March : 33.3 hours
April: 33.2 hours
Expectation for May: 33.2 hours
 Actual May report: 33.2 hours

Post-report comment: as expected…

Please check back shortly after 8:30am to review the numbers and market reaction!! In pre-market trading, stock futures indicate the market would open higher by approximately 1%. The 10yr U.S. Treasury is quoted at 3.35%.

Post-report comment: the bond market has rallied marginally as the overall report continues to show weakness throughout the private sector. The equity market is a touch lower. Analysts are spinning the report as a slowing in the pace of declines. Does this report portend an improved tone in spending, economic activity, and lessened defaults and foreclosures. Not in a hurry.

LD

  • Arabella Trefoil

    My analysis: Things are getting worse at a slower rate. And there is a long way to go before we hit bottom.

    • Linda Anselmi

      Thanks for the great information and analysis LD.

      I would add to Arabella Trefoil comment – I think it is only a temporarily slower rate that will pick up speed again over the next couple of months as the economy (in all it diversity) gets tired of crossing it fingers and holding its breath.

      • oowawa

        The “massaging” of the unemployment numbers in these government reports has certainly not escaped the attention of a great many Wall Street traders. Here is a typical comment from a trader named “saabnut9000″ from the Market Watch comments section:

        This is all market manipulation. Saying that “ONLY” half a million jobs (539,000) were cut in April is good because analysts predicted 600,000 is total BS. In what universe losing another half a million jobs is good I dont know but the big picture is that the national unemployment rate jumped almost 1/2% ot 8.9% in one month, if it kept its current pace we will be at 10% by July. But the key word is “predicted” and the reality is job losses keep mounting and reemployment is almost non-existant right now. We are at 26 year high in unemployment and the funny thing is next month they will revise the numbers to what they ACTUALLY are and will be closer to the 600,000 that was actually predicted. They revised the numbers for Feb. and March by 66,000 higher after the fact. And another little tidbit of info is that of the 13.7 million OFFICIALLY listed as unemployed a RECORD 27.2% have been unemployed longer than 6 months

        Of course, most folks just see the “Better Than Expected” headlines, and let it go at that.

  • apishapa

    I work for the State of Colorado. While we have not had layoffs, over the next year we are all expected to take at least four furlough days. No raises at all. No new or replaced workers. No summer temps for my Division. TABOR baby!

    And we are expected to choose our health plans this next week without having any information on what our premiums are. We have not received any information concerning health coverage for next year. But, the deadline to choose health ccare plans is May 24.

    The no temps is a real problem for my division because we regulate irrigation water. Since farmers only irrigate in the summer, we generally hire a lot of temps to inspect wells and ditches. We cannot possibly keep the peace between irrigators without adequate p[ersonnel. However, water users have gone several times to Denver to try to get some funding back for Water Resources because they do not want to go back to the days of water wars.

    For the last five months, I have been doing my own full time job, my ex-supervisor’s full time job and half of another technician’s job, with no additional pay. I finally told the Division Engineer that I must either have overtime or I wasn’t going to be able to get everything done. Or someone else needs to kick in and help. I am tired. I am mad. I am under a lot of stress and I don’t get paid enough for that shit. I’m now working 6 days a week (got the overtime, because no one else knows my job). And I cannot keep up. Like I told the boss, I am working twice as hard, but there is three timnes the work on me.

    I’m not the only one who is feeling picked on. Right now this office is 25% understaffed. I know of two other people who are about to jump ship. But, when things fail to get done, taxpayers will howl.

    • politicalidentitycrisis

      That is the same kind of stuff that happened where I work. I do about 100 hours worth of work in 40 hours. It is bad and we are facing more work force reductions in about a week.

      Work conditions turn to shit in a depression. It will only get worse.

  • Peggy Sue

    They’re fudging all these stats in the same way the stress tests have been fudged. Goolsbee slipped 6 weeks ago about the unemployment figure of 8.5, and admitted that the real figure with underemployment, people who had “given up,” people who had settled on part time employment etc, etc. was more in the 15-18% range.

    This is creative number crunching taken to the max., creating a palatable narrative for public consumption. They call it “creative.” The rest of us call it lying.

    Thank you again, Larry. You’re doing something very important.

  • ConfusedAmerican

    Wait until June when all the College and High School Graduates start looking for jobs….Should be interesting in this economy.
    New teachers are being looked for cause with all the educational budgets school districts dont want to hire the laid off more experienced teachers at the higher salaries they would have to pay.

  • oowawa

    Wow! Are the analysts that good or are these numbers being “managed” or “massaged” so as not to overly upset the markets?

    Oh yeah–figures are being “massaged” so that the happy investor feels “better than expected” and forks over his money.

    Later, when the “better than expected” figures are revised downwards and the thrill is gone, the deception is not factored in as the lie it was, and the public is ready to be “massaged” once again. Anything to make the investor feel good and hand over his cash with a smile on his face! In fact, the investor will feel so good, that if he is confronted with any actual really bad news, he will be able to “shrug it off.” Now for another massage!

  • ConfusedAmerican

    By voting for a 3rd party or Democratic candidate for any office you are giving Obama even more power.
    From now on until Obama is out of office I will be voting Republican, uless the Republican is a total total criminal jerk.

    • ConfusedAmerican

      hmmm Im on wrong thread srry about that.

      • oowawa

        LOL ConfusedAmerican–you really lived up to your name on that one!

  • Objective Analysis

    We are so screwed with TOTUS. He is destroying the very fabric of what has made America (e.g. gainful employment).

    Now he is making us WARDS of the state.

    Why is I feel he reminds me of King George I?

  • Sammie

    http://finance.yahoo.com/tech-ticker/article/243817/The-Big-Lie%3A-Stress-Test-Optimism-Just-Wall-St.-Propaganda%2C-Former-Bank-Regulator-Says

    Wall St. Propaganda …. say it ain’t so ….

    On a more serious note, I wonder just how much of what is being reported we can believe.

  • Daisyjane

    ooawawa,

    I love the denninger blog. This one got my attention:

    http://market-ticker.denninger.net/archives/1016-Why-We-Are-Absolutely-Screwed.html

    So the “bottom” we’re looking for is quite a ways off, as evidenced by this chart (which is downright scary, if you ask me):

    http://www.elliottwave.com/freeupdates/archives/printer/2008/12/18/What-Is-The-1-WRONG-Question-About-the-Real-Estate-Market.aspx

    If anyone wants to watch the 60 minutes report referenced above, here it is:

    http://www.cbsnews.com/video/watch/?id=4668112n

  • http://www.consumergrantreport.com/ Daisyjane

    ooawawa,

    I love the denninger blog. This one got my attention:

    http://market-ticker.denninger.net/archives/1016-Why-We-Are-Absolutely-Screwed.html

    So the “bottom” we’re looking for is quite a ways off, as evidenced by this chart (which is downright scary, if you ask me):

    http://www.elliottwave.com/freeupdates/archives/printer/2008/12/18/What-Is-The-1-WRONG-Question-About-the-Real-Estate-Market.aspx

    If anyone wants to watch the 60 minutes report referenced above, here it is:

    http://www.cbsnews.com/video/watch/?id=4668112n
    BTW I love your blog!