Jobs, Jobs, Jobs In Focus: It May Be a Bad One

U-6 is still over 16% and rising!

from Fox Business:
Fall begins officially with the equinox on September 22, but the summer season traditionally ends with Labor Day. Heading into Labor Day at the end of the coming week, the summer season, like the T.S. Eliot poem, will finish with a whimper – another dismal employment report.
Sure, we’ll hear a loss of anything less than the 247,000 jobs reported for July will be seen as a positive – even though it’s hard to celebrate the loss of any jobs – but there are suggestions the July report may have been unseasonably low.
Indeed, seasonality may have been at the heart of the stronger -- really “less weak” -- than expected report last month and autos were at the heart. In July the number of payroll jobs – before seasonal adjustment – fell 1.3 million, the fourth worst performance since the recession began in December 2007. Seasonal adjustments which affected data on unemployment insurance claims also brought down the reported numbers in the employment report. The automobile industry annually affects labor reports in July when the industry historically shuttered plants and furloughed workers to re-tool for the new model year.
Those closings took place a month earlier this year throwing the adjustments out of line, waiting for corrections with the August report next Friday.
A report showing the number of job losses increased – regardless of the explanation – is always bad news, but the timing now couldn’t be worse as we head into a three-day weekend, the last holiday of “summer” when seasoned Wall Streeters are likely to duck out early and leave trading in the hands of less-experienced analysts and traders who could over-react to any wrinkle in markets or data.
There’s certainly no guarantee payroll data will move sharply negative but the failure of initial unemployment claims to fall and the still high levels of continuing unemployment insurance claimants signals a continued hiring strike among employers. The assertion continuing claims requires an explanation since a casual look at the data shows a decline – but that has been concentrated in the basic benefit program providing 26 weeks of unemployment insurance payments. The total though including two separate benefit extension programs has not shown the same improvement.
And that steady drain of unemployment benefits has depleted state unemployment insurance trust funds to the extent that 17 states have borrowed more than $12.6 billion from the Federal government to be able to continue to provide insurance payments.
The absence of any significant improvement in initial claims data suggests the problem will only grow and continue to slow a sustainable economic recovery.
New information from the Bureau of Labor Statistics underscored the dilemma. According to BLS, from April to July, the number 16 to 24 years olds working increased by 1.6 million to 19.3 million but the proportion of young people who were employed in July was 51.4% the lowest July rate on record for the series, which began in 1948.  (July, according to BLS, is the traditional summertime peak for youth employment.)
There is some irony that we remain in the lazy end of summer as we head into next week though, facing a calendar full of important indicators, some of which will be factored into estimates of the Friday employment report, perhaps creating undue optimism.
One closely watched number will be Tuesday’s tally of August auto sales, inflated as they may have been by the government incentive program. That program and that report are illustrations of how inter-related the elements of the economy are. The boost in sales – which was only partially reflected in personal consumption data – has already sent auto workers back to their plants, but that could be temporary if sales levels don’t remain elevated. Nonetheless, the Institute for Supply Management’s manufacturing index – due out Tuesday will likely reflect the increased manufacturing activity, though it may not be a factor in the non-manufacturing (service sector) index two days later. Both the manufacturing non-manufacturing report will include employment data used to refine forecasts for Friday.
In addition, the Federal Reserve Wednesday will release the minutes to the August 11^th and 12^th Federal Open Market Committee meeting.
Mark Lieberman is the senior economist for the Fox Business Network. Prior to joining FOX, he served as first vice president and manager of economic analysis and research at Washington Mutual in New York. Before that, he served as senior vice president at Dime Savings Bank of New York (which was later acquired by Washington Mutual), where he specialized in credit and risk management. He is a member of the Executive Committee of the New York Association for Business Economics. He has a degree in Economics from the Wharton School of the University of Pennsylvania.