by Calculated Risk on 11/05/2010 10:04:00 AM

Here are a few more graphs based on the employment report ...

Percent Job Losses During Recessions, aligned at Bottom

Click on graph for larger image.

This graph shows the job losses from the start of the employment recession, in percentage terms - this time aligned at the bottom of the recession (Both the 1991 and 2001 recessions were flat at the bottom, so the choice was a little arbitrary).

The dotted line shows payroll employment excluding temporary Census workers.

Employment-Population Ratio

The Employment-Population ratio declined to 58.3% in October from 58.5% in September. This is disappointing news.

This graph shows the employment-population ratio; this is the ratio of employed Americans to the adult population.

Note: the graph doesn't start at zero to better show the change.

The Labor Force Participation Rate also declined to 64.5% in October from 64.7% in September. This is the percentage of the working age population in the labor force. The participation rate is well below the 66% to 67% rate that was normal over the last 20 years.

When the employment picture eventually improves, people will return to the labor force and the participation rate will increase from these very low levels. Right now workers are leaving the labor force, and even though that is keeping the reported unemployment rate from rising, it is really unwelcome news.

Part Time for Economic Reasons

From the BLS report:

The number of persons employed part time for economic reasons (some-
times referred to as involuntary part-time workers) fell by 318,000
over the month to 9.2 million, partially offsetting large increases in
the prior 2 months. These individuals were working part time because
their hours had been cut back or because they were unable to find a
full-time job.

The number of workers only able to find part time jobs (or have had their hours cut for economic reasons) declined to 9.154 million in October, from the record 9.472 million in September. This is still very high.

These workers are included in the alternate measure of labor underutilization (U-6) that decreased to 17.0% in October from 17.1% in September. The high for U-6 was 17.4% in October 2009. Still grim.

Unemployed over 26 Weeks

This graph shows the number of workers unemployed for 27 weeks or more.

According to the BLS, there are 6.206 million workers who have been unemployed for more than 26 weeks and still want a job. This was up from 6.123 million in September. It appears the number of long term unemployed has peaked ... although this may be because people are giving up.

The number of long term unemployed is staggering - still over 6 million people who are looking for a job.

Summary

The underlying details of the employment report were mixed. The positive included the 151,000 payroll jobs added, the upward revisions to August and September, a slight uptick in hours worked and average hourly earnings, and a slight decline in part time workers (and slight decline in U-6 unemployment).

The negatives include the declines in the employment-population ratio and the participation rate, the increase in workers unemployed for over 26 weeks, and the unemployment rate still flat at a very high level.

This report was a clear improvement from the previous four months, but this was still a fairly soft report.

Earlier Employment post: October Employment Report: 151,000 Jobs, 9.6% Unemployment Rate

by Calculated Risk on 11/05/2010 08:30:00 AM

From the BLS:

Nonfarm payroll employment increased by 151,000 in October, and the unemployment rate was unchanged at 9.6 percent, the U.S. Bureau of Labor Statistics reported today.

Both August and September payroll employment were revised up.

Click on graph for larger image.

This graph shows the unemployment rate vs. recessions. The unemployment rate has been stuck at 9.6% for three straight months.

Nonfarm payrolls increased by 151 thousand in October. The economy has gained 829 thousand jobs over the last year, and still lost 7.5 million jobs since the recession started in December 2007.

The second graph shows the job losses from the start of the employment recession, in percentage terms (as opposed to the number of jobs lost).

The dotted line is ex-Census hiring. The two lines have joined since the decennial Census is over.

For the current employment recession, employment peaked in December 2007, and this recession is by far the worst recession since WWII in percentage terms, and 2nd worst in terms of the unemployment rate (only the early '80s recession with a peak of 10.8 percent was worse).

This is an improved employment report compared to recent months. I'll have much more soon ...

by Calculated Risk on 11/05/2010 12:01:00 AM

A late night update ... from the Financial Times: Clearing house warning to Irish bond traders

Fears over the health of the eurozone bond market intensified after one of Europe’s biggest clearing houses warned investors they could be compelled to stump up substantially more money to trade in Ireland’s debt.
...
Such a curb would be a blow to the Irish debt market and comes amid growing concerns over the fragility of the euro­zone’s peripheral economies.
excerpt with permission

And from the Irish Times: Government to postpone publication of four-year plan

A detailed four-year budget had been scheduled for publication in the next week or so but it emerged yesterday that the plan will not be disclosed until closer to the December budget.

by Calculated Risk on 11/04/2010 06:14:00 PM

The BLS will release the October Employment Report at 8:30 AM tomorrow. The consensus is for an increase of 60,000 payroll jobs in October, and for the unemployment rate to stay steady at 9.6%.

Most of the reports this week have been slightly above expectations:

The ADP employment report showed an increase of 43,000 private sector jobs in October. This was above expectations of 20,000 private sector jobs.

The ISM manufacturing employment index increased to 57.7 from 56.5 in September. This suggests some minor manufacturing job growth in October, although the ADP report showed a decline in manufacturing jobs.

The ISM non-manufacturing employment index increased to 50.9 from 50.2 in September. Although the relationship between this index and payroll jobs is noisy, this suggests close to 100,000 service jobs added in October.

Weekly initial unemployment claims were at about the same level in October as in September.

The decennial Census hiring and layoffs can finally be ignored this month. However it is worth remembering that the payroll reports showed job losses for each of the last four months, but excluding the decennial Census, the reports showed average gains of about 40,000 per month. So reports tomorrow that "this is the first gain since May" will be a little misleading.

I don't expect a strong report, but perhaps slightly better than expectations (I have no strong view this month).

by Calculated Risk on 11/04/2010 02:29:00 PM

As followup to the previous post, here is a look at European bond spreads from the Atlanta Fed weekly Financial Highlights released today (graph as of Nov 2nd):

Click on graph for larger image in new window.

From the Atlanta Fed:

Some peripheral European bond spreads (over German bonds) continue to be elevated, particularly those of Greece, Ireland, and Portugal.

Since the September FOMC meeting, the 10-year Greece-to-German bond spread has narrowed by 45 basis points (bps), from 8.62% to 8.17%, through November 2, though the spread has risen by 110 bps in the past two weeks.

Similarly, with other European peripherals’ spreads, Portugal’s is essentially unchanged over the intermeeting period but is 56 bps higher than two weeks prior, and Ireland’s spread is actually 70 bps higher since the last FOMC meeting and 100 bps higher since October 19.

The Atlanta Fed data is a couple days old. Nemo has links to the current data on the sidebar of his site.

As of today, the Ireland-to-German spread has increased to a record 525 bps, and the Portugal-to-German spread has increased to 417 bps - just below the record set in late September. The Greece-to-German spread is at 892 bps.

by Calculated Risk on 11/04/2010 12:24:00 PM

The yield on the Ireland 10-year bond surged again today to 7.68%. The Portugal 10-year yield is near a record at 6.57%.

At what point does it make sense for Ireland to use the European Financial Stability Facility (EFSF)?

Wolfgang Münchau at the Financial Times worked through the details in September and estimated the EFSF borrowing costs would be around 8%: Could any country risk a eurozone bail-out?

It is not all that hard to conceive of a situation in which the borrower would end up paying a total interest rate of 8 per cent ... Three issues arise from this set-up. The first is that no country would ever want to borrow from the EFSF, unless it was absolutely unavoidable. The typical situation where an EFSF loan would be useful would be a case of egregious market failure. If the borrower is insolvent, the EFSF cannot help.
excerpt with permission

So probably at around 8%. Ireland apparently will not need to borrow until sometime in 2011 - and they will do everything possible to avoid the EFSF, still the yields are getting close for the EFSF to make sense ...

And it appears Russia has stopped investing in bonds of Ireland and Portugal - via Tracy Alloway at the Financial Times Alphaville: The world backs away from Ireland, Spain, Portugal

There’s something missing from the Russian Finance Ministry’s website.

No mention of Ireland, Portugal or even Spain.