We can’t even party like it’s 1982...
If Tuesday’s mid-term U.S. elections and Wednesday’s FOMC meeting were not enough to cause agita for you, then there is always the chance this morning’s U.S. nonfarm payrolls report will do it.
The market is looking for a gain in private payrolls for October of around 80K to compound last month’s reported 64K build. Overall nonfarm payrolls are expected to grow by around 60K. In September total nonfarm jobs reportedly fell by 95K. The unemployment rate is expected to remain at 9.6%. (Update: Stronger Jobs Report Signals 'Moderate Recovery')
In other words, the report is expected to be bad, or as Wall Street loves to say, it is expected to be "less bad." After all, a 64K increase in jobs is a hell of a lot better than a 95K decrease, but it is well below the 200K to 300K required to turn the employment picture around.
On Wednesday we got a preview of this morning’s report. The ADP Employment Change increased by 43K and the Challenger Job Cuts fell 32% in October from a year ago. Both reports were… get ready for it… less bad. A 43K increase from ADP was better than last month’s 39K decrease, but again, it is still not good enough.
Meanwhile, per the Challenger numbers lower year-on-year job cuts is certainly better, but poor job growth in the private sector indicates that firms are decreasing firings, but they are not increasing hirings.
Furthermore, on Tuesday the BEA reported an unexpected 0.1% drop in personal income in September and yesterday the BLS reported a strong rise in third quarter nonfarm productivity, but an unexpected 0.1% decline in unit labor costs.
Employers are therefore making more with less, i.e., while the Fed is intent upon sparking asset inflation, they’re doing little to address extant wage deflation. That is not good news for the 457K workers that just filed for unemployment insurance last week. Speaking of which, weekly jobless claims are averaging 485K since the official end of the recession. Claims through the recession averaged 5K fewer!
Todays issue of The Schork Report puts this data into perspective: by this point in the recovery from the last great recession (1982), jobless claims were averaging 125K fewer than their recession average. But then again, the job force has grown by 45% since 1982. So proportionally, we are doing better today than then (not really, see next paragraph), but we are far from doing well compared to recent norms. In the last quarter (3Q07) prior to the start of this recession, claims averaged ?317K.
In 1982, crude oil was around $32 a barrel — or in today’s dollars, ?$72.50. Ah, those were the days.
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Stephen Schork is the Editor of The Schork Report and has more than 17 years experience in physical commodity and derivatives trading, risk systems modeling and structured commodity finance.