Next Week USA September Jobs Growth Likely Will be Bad

Trends exist until they are broken – and the trends say private non-farm payroll growth will be 60,000 in September.  If we throw in the 45,000 Verizon workers the BLS did not count last month as employed because they were on strike – that ups the BLS private non-farm headline to 105,000 when their data is released this coming week.

I believe the ADP employment numbers are the real time numbers to watch – not BLS.  The BLS methodology has slower data gathering than the modeled and extrapolated ADP employment numbers.  Several months down the line – the BLS will have all its data inputs providing an accurate number.

In a historical context, both ADP and BLS are on the same page.  Year-to-date jobs growth is 1,156,000 for ADP and 1,162,000 for BLS – a 0.5% difference.

Look at the employment trend lines for 2011 – all trending less good.  The ADP trend line growth has been declining 30,000 each month in 2011.  So a projected jobs growth of 60,000 is well under the labor market growth of nearly 170,000 per month (based on the employment to population ratio of 64.4%).   The USA system of monitoring employment ignores our graduates entering the workforce (among others).

Econintersect has also modeled job creation dynamics – this is another sad story.

The model says the economic drivers for employment growth will worsen in the coming months.  Many will not like the message in this post – that employment is bad and likely will get worse.  Many are criticizing European leaders for ignoring mishandling their debt crisis.  The USA has been ignoring AND mishandling its employment crisis since 2000 – and see, nothing bad has come of it.

Economic News this Week:

The Econintersect economic forecast for October 2011 predicts very weak growth.  It is worrisome that the economy is this weak as any methodology error or abnormal condition could cause the wrong conclusion.  A more positive note is that there has been a mediocre improvement in the data over the last two months.

ECRI has called a recession. Their data looks ahead 6 months and the bottom line for them is that a recession is a certainty.  The size and depth is unknown.  Although Econintersect’s data is not yet recessionary (one month look-ahead) – I would take this recession call seriously.

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This week the actual level of ECRI’s WLI index is academic.  It did worsen, and the indications are it will continue to worsen.

Continuing the roller coaster ride of good news -bad news, initial unemployment claims fell 37,000 (from 428,000 which was revised up from a preliminary 423,000 last week) to 391,000.  This is the best seasonally adjusted weekly number since 02 April 2011.  Some pundits are explaining away the improving numbers – but there are always reasons why the number is too good or too bad.

Historically, claims exceeding 400,000 per week usually occur when employment gains are less than the workforce growth, resulting in an increasing unemployment rate. The real gauge – the 4 week moving average – declined only 5,250 to 417,000 because of the backward revision. Because of the noise (week-to-week movements from abnormal events), the 4-week average remains the reliable gauge.

The primary data point this week was the equities markets correction. This makes the richer half of the population poorer, and poorer people think twice when ordering their next yacht.

Weekly Economic Release Scorecard:

2Q2011 GDP:  A nuts & bolts look at the data
September UM Consumer Sentiment: A little better than expected by not good
October Economic Forecast: Meager growth but possible new upward trend
August PCE: There are a few reasons to ignore this data
2Q2011 GDP (third estimate): Revised back to 1.3% on sick personal consumption
August Pending Home Sales: Shows Slowly Improving Home Sales volumes
August Durable Goods: Actually has good news in the data
September Consumer Metrics: Values have peaked – economic implications?
September Conference Board Consumer Confidence: Confidence is still declining
July Case-Shiller Home Prices: Improving but real time indexes are falling
Euro Crisis: Synthetic bonds are the answer
August New Home Sales: Shows this depressed sector is expanding
August CFNAI:  This super coincident index remains in declining trend line
Global Macro Picture: How will the economic decline play out?
USA Income Taxes: Buffett Could Be Paying Less Tax than his secretary
USA Leadership: Does it matter who is President
Euro Crisis:  Why Mosler Bonds are the answer
Central Banks: Are Their days numbers
Euro Problems:  Never believe anything until it is denied
IMF: Are the economists now thinking out of the box?
USA Budget: Is their real societal benefits for much of the spending
Eurozone Paychecks: The highest wage growth is in deficit countries
Copper: Is it signalling a new deflation cycle?
Global Investing Opportunities: Investing when others panic
Investing: How to spot short term trend changes
Recession: Data at this point does not indicate a recession is likely
ETF’s:  There is a dark side – ETF’s pose a systemic risk
Coppock Curve: May not always be a killer
Equities Markets: Is today’s market comparable to 2008 or 2009

Bankruptcies this Week:  Public Media Works, Hussey Copper, Graceway Pharmaceuticals

Failed Banks this Week: