On Closer Inspection The Employment Report Is Even More Depressing
Bruce Krasting, My Take On Financial Events | Jul. 9, 2011, 9:33 AM
I suppose that the Non Farm Payroll report could have been worse than it was. But not much worse. Some of the talking heads are calling the latest news a “soft patch”. Maybe so. We shall see. My read is that the report was (more) clear evidence that the economy is grinding down. The second half of this year is likely to show only marginal growth. The June NFP was the tip off.
Johan Hulath at Morgan Keegan prepared the following slides. As is often the case pictures tell the story better than words.
A recap of the NFP data. Note that there is no category that was not under street expectations. Things are much worse in employment land than anyone thought.
Labor force participation is now at levels not seen in a decade. A look at this chart confirms that as of Friday it hit a new record low.
So why no jobs? Easy, we are not making as much “stuff”. Follows are some regional indicators of economic performance. Yes, there are a few “plusses” on the list but mostly it is flat to down. This chart and the key underneath tells the story of the decline.
The best single gauge of manufacturing comes from the ISM. This is now at 55. A fall below 50 would signal a contraction. Are we going to get to that magic number? This chart suggests we might:
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