Friday, September 4, 2009
Rosie via Zero Hedge
While nonfarm payrolls were basically in line with the consensus, declining 216,000 in August, there were downward revisions of 49,000 and the details were simply awful. The fact that 65% of companies are still in the process of cutting their staff loads is quite disturbing — even manufacturing employment fell 63,000 in August, to its lowest level since April 1941 (!), despite the inventory replenishment in the automotive sector and all the excitement over the recent 50+ print in the ballyhooed ISM index.
Employment in this survey showed a plunge of 392,000, but that number was flattered by a surge in self-employment (whether these newly minted consultants were making any money is another story) as wage & salary workers (the ones that work at companies, big and small) plunged 637,000 — the largest decline since March (when the stock market was testing its lows for the cycle). As an aside, the Bureau of Labor Statistics also publishes a number from the Household survey that is comparable to the nonfarm survey (dubbed the population and payroll-adjusted Household number), and on this basis, employment sank — brace yourself — by over 1 million, which is unprecedented.
(Somewhere, in some reality, according to quantum mechanics, that headline leads on bubblevision. -AM)
Unless the laws of supply and demand have been permanently repealed, this record and growing amount of slack in the labour market is only going to exert more downward pressure on wages at a time when organic personal income is deflating at nearly a 5% annual rate.
Jobless claims continue to “improve” from ever-upwardly-revised data — declining 4k in the August 29th week to 570k (somehow the change in the data don’t look that bad because — guess what? — they have been revised higher in each of the past 23 weeks!). (The key four-week moving average rose 4,000, to 571,250, the highest since July 18th. So the bulls claim that the fact that jobless claims are no longer at their 670,000 peaks, and that 570,000 is acceptable is akin to saying that you’re happy that your golf score is 130 and not 150. Give me a giant break.
At 570,000, claims are actually higher now than they were at the peaks of the 2001 and the 1991 recessions. To be calling for the recession to be ending with claims as high as they are currently is definitely in the “new normal” zone for most economists.