note on the graphs used here

sometime during the third week of March, the St Louis Fed, home to the FRED graphs, changed their graphs to an interactive format, which apparently necessitated eliminating some of the incompatible options which we had used in creating our graphs, and also left us with about half the options we had available and used before the upgrade...as a result, many of the FRED graphs we've included on this website previous to that date, all of which were all stored at the FRED site and which we'd always hyperlinked back there, were reformatted, which in many cases changed our bar graphs to line graphs, and some cases rendered them blank or unreadable... however, you can still click the text links we've always used in referring to them to view versions of our graphs as interactive graphs on the FRED site, or in the case where a graph has gone missing, click on the blank space where it had been in order to view it....


Sunday, October 7, 2012

september unemployment, US & other PMIs, august consumer credit (re student debt)

let's just begin by noting the two headline job creation numbers from the september employment report from the BLS: according to the establishment survey of one-third of the businesses and agencies in the US, total nonfarm payroll employment rose by a seasonally adjusted 114,000 in september; while from the survey of about 6/10th of a percent of US households, BLS reported a spike in those employed of 873,000; since the former has a margin of error of 100,000, and the latter has a margin of error of 400,000, even allowing for the maximum deviation in each, it seems one just must be quite inaccurate...fortunately, spencer at angry bear began his charting of this month's report with a bar graph showing the monthly employment change as reported by each survey since the beginning of 2010; the change in non-farm payrolls as reported monthly from the establishment survey are in red, while the change in those reporting employment in the household survey each month are in blue...except for the slight tendency for stronger job growth early each year followed by weaker summers, which could be a function of the seasonal adjustments, we've clearly been adding non-farm payroll jobs at a fairly steady pace throughout the recovery, whereas the employment change reported out of the household survey is so regularly aberrant it's hard to see why anyone gives it credence...yet sadly, it is from that survey where the media gets the unemployment rate that is reported in the headlines monthly...so while we'll look at both surveys, at least we'll know that the numbers reported by the household survey should be taken with a rather large grain of salt...

as noted, the establishment survey reported nonfarm payroll employment increased by 114,000 in September, and the change payroll employment for July was revised from a gain of 141,000 jobs to an increase of 181,000, and the change for August was revised from 96,000 to 142,000 jobs added, so on net, we've had some modest  job gains... in addition, since september is the month when school employees are back at work, the seasonal adjustment reduces non-farm payrolls to smooth the transition; without that adjustment, there were actually 574,000 more NFP jobs in september than august...but the seasonal adjustment probably understated NFPs in september, just as we discussed how july's seasonal adjustment overstated jobs then, because school districts have cut back more than ever before previously...even though they're useful when comparing the current month to the previous one, the seasonal adjustment computations are only as good as seasonal employment in the current year reflects the same pattern as in year's past (ie, as we saw with this year's early spring)...overall, this year has only produced weak job gains, at an average of 146,000 per month, compared with an average monthly gain of 153,000 in 2011...job gains in september were concentrated in health care, which added 44,500 jobs (of which 30,000 were in ambulatory services) and in moving and warehousing goods, which accounted for 17,000 more jobs than august (seasonally adjusted), while the manufacturing sector lost 16,000 jobs and has now given up all of its job gains back to april, while the mining construction, wholesale & retail trade, information, professional & business services, leisure and hospitality, and government sectors all showed statistically insignificant changes in employment from august to september... meanwhile, the average workweek for all employees on private payrolls was up by 0.1 hour to 34.5 hours, while the manufacturing workweek was also up 0.1 hour to 40.6 hours, and factory overtime was unchanged at 3.2 hours...also, average hourly earnings for all employees reportedly rose by 7 cents to $23.58, while pay for production and nonsupervisory employees increased by 5 cents to $19.81; table B-3 further breaks average earnings down by industry sector for the last 3 months, as well as a year ago...FRED Graph


with the household survey reporting 873,000 more of us working in September than August, and 456,000 less unemployed, the official unemployment rate fell from 8.1% to 7.8%, the lowest the U-3 rate has been in 44 months...the jobless rates for adult men fell to 7.3%, while it also fell to 7.0% for adult women and for all whites; meanwhile the unemployment rates for teens, hispanics & blacks were little changed, at 23.7%, 9.9%, & 13.4% respectively...but the jobless rate for those with less than a high school education fell to 11.3%. and it has now declined by 1.4% over the last two months, to reach its lowest in nearly 4 years...the two metrics derived from this survey that we've been watching also showed improvement; after two months of slumping, the employed to population ratio popped 0.4% to 58.7%, while the labor force participation rate ticked up a tenth of a percent to 63.6%, but remains lower than july's 63.7%, as you see on the adjacent graph...it also appears that a large number of the jobs reported added in this survey were part time; the number reporting they were working part time but wanted a full time job jumped by a seasonally adjusted 582,000 to 8,613,000, leaving the U-6 unemployment rate unchanged at 14.7%...there was also a seasonally adjusted increase of 58,000 farm workers in september (which are not reported by the establishment survey), so it's possible some of the job gains here may be due to a weather-related early harvest...

the two major surveys of US purchasing managers by the Institute for Supply Management:, which had been showing weakness over the summer months, seem to have stabilized now that fall has arrived; the September ISM Manufacturing Report;, which had shown slight contraction over the previous three months, is now showing renewed expansion, as the PMI increased 1.9 percentage points to 51.5%; the important new orders index rose to 52.3%, up from 47.1%, while the employment index was at 54.7%, up from 51.6%; the production index was still showing contraction for the 2nd month at 49.5, but it also tacked on 2.3 points in september, while the order backlog at 44.0, exports at 48.5, and imports at 49.5 all increased, indicating the were all contracting slower...11 of the 18 manufacturing industries reported growth, led by textiles, the food groups, printing and wood products, while mineral products, electrical equipment, appliances, transports, machinery, chemical products & electronics all noted slowdowns...meanwhile, in another metric of manufacturing health, the census released Manufacturers' Shipments, Inventories, and Orders for August (pdf); this is the full report which echoes the report on durables manufacturing which we discussed last week; with new orders for durable goods already reported as down 13.2%, it wasnt much of a shock to see the total factory orders report down $24.9 billion, or 5.2% for the month, which was also the largest drop since january 2009, but reflecting the weakness we saw in durables, excluding transportation new orders were up a a decent 0.7%...factory shipments, which like orders were down two of the last three months, decreased $1.3 billion or 0.3% to $476.9 billion, while unfilled orders were down following two consecutive monthly increases, decreasing $17.0 billion or 1.7% to $978.8 billion, leaving the unfilled orders-to-shipments ratio at 6.27, up from 6.23 in July...inventories were up again, by $3.7 billion or 0.6% to $611.8 billion, which, like durables inventories, were at the highest level since this tracking started in 1992...

  the other ISM report was for the September Non-Manufacturing Indices, which cover the service industries; the overall business PMI, referred to as the NMI, showed another surprise to the upside, as it showed the 3rd consecutive month of faster growth at 55.1%, 1.4 percentage points higher than the 53.7% logged in August; the business activity index registered 59.9%, which was 4.3 percentage points higher than the 55.6 percent reported for August, while the new orders index also jumped 4 points to register a 57.7%; the weakness in this report was the employment index, which decreased 2.7 points to 51.1%, which nonetheless still indicates growth, as do all numbers over 50%...the service industries leading the gains in this report were transportation & warehousing; retail; construction; utilities and education, while only mining; entertainment & recreation; and real estate rental & leasing.reported contraction...historical graphs for both of the overall ISM PMIs, as well as several real estate reports that we wont cover today, can be viewed at bill mcbride's summary for the week ending oct 5th, which also includes a selection of his graphs on the employment report..
as is typical, the first week of the month brings on a raft of worldwide manufacturing and service purchasing managers reports, most of which are released in pdf form by London data firm Markit; the closely watched Eurozone Manufacturing PMI rose to 46.1 in September from 45.1 in August and higher than the earlier flash reading of 46.0; however, that was the 14th consecutive reading below the neutral 50 reading and still indicates that manufacturing in the 17 nation bloc continues to contract, just a bit slower this month than last...moreover, the Eurozone Services Business Activity Index fell from 47.2 in August to 46.1 in September, indicating that the continent's recession is spreading deeper into the service sector...that brought the Final Eurozone Composite Output Index:(pdf) down to 46.1 from it's August reading of 46.3...particularly weakness was shown in France;  the French Manufacturing PMI, which fell from an August reading of 46.0 to 42.7, the second worst PMI reading worldwide after Greece, indicating severe contraction (chart shows select eurozone manufacturing PMIs)...the Markit Services Activity Index for France at also fell, to an 11 month low of 45.0, from August's 49.2, leaving the Final Markit French Composite Output Index (pdf) at 43.2, down to a 42 month low, from a reading of 48.0 in August...worldwide manufacturing activity is also compiled monthly by JPMorgan, who releases a Global Manufacturing PMI (pdf) – a composite index produced by JPMorgan and Markit in association with ISM & others; global contraction continued in September, following further a slowdown in both output and new orders, as the JP Morgan global index posted a 48.9, up slightly from August's 38-month low of 48.1, but below 50 for the fourth month running...the WSJ has a sortable interactive table of worldwide factory PMI readings by country; as they note in another article, US manufacturing is the best horse in the glue factory...


another report released on friday that was completely overshadowed by the hullaballoo over the employment release was the August consumer credit from the Fed, which returned to the form that prompted our watching it starting last year, as overall credit rose at a seasonally adjusted annual rate of 8%, or $18.1 billion, over july's level, which was the largest consumer credit increase in 3 months...$4.2 billion of the increase was revolving credit, such as credit card debt, which rose at a 5.9% rate to $854.9 billion, while the non-revolving portion of this credit report, which includes car & student loans but not real estate, showed a $13.9 billion increase from July's $1,856.8 billion to $1,870.7 billion in August, rising at an annualized 9.0% rate…the adjacent zero hedge chart shows both types of credit monthly since the Fed revision; blue is change in credit card debt, while red is the change in non-revolving credit, with the dark line tracing the monthly totals...but the big credit story this month was again in student loans provided by the federal government, which rose an amazing $23.9 billion in August alone, as federal consumer loans went from $471.8 to $495.7 over the period (see the 2nd table, Consumer Credit Outstanding, Major types of credit, by holder) which could be written as an annualized growth rate of 80.8%, although, to fair, the breakdown isnt seasonally adjusted, whereas the summary totals are...but we are talking dollars here, and in the 5 year period between 2007 and August of this year, outstanding consumer credit held by the federal government rose more than fivefold, from 93.01 billion in 2007, to $495.7 billion this month (see same line)...that sure looks like a concerted effort to bind a generation into indentured servitude from here.. 


(the above is my weekly commentary that accompanied my sunday morning links mailing, which in turn was mostly selected from my weekly blog post on the global glass onion, and also includes other links of interest…if you’d be interested in getting my weekly emailing of selected links that accompanies these commentaries, most coming from the aforementioned GGO posts, contact me…)

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