Friday, August 7, 2009

Today's Employment Report-"Economists React: ‘Gift That Keeps on Giving’"

From the Wall Street Journal's Real Time Economics blog:

Economists and others weigh in on the smaller-than-expected decline in nonfarm payrolls and the drop in the unemployment rate.

  • July’s Employment Report is the gift that keeps on giving. Nearly every element of it is positive. Most notably, non-farm payrolls fell by a more modest 247,000 last month, the smallest decline since August 2008. Admittedly, a decline in employment of that magnitude still seems hard to square with the growing speculation that the recession ended around mid-year. Looking back, however, the economy lost 265,000 jobs in the first month of the recovery in 2001 and 226,000 jobs in the first month of the recovery in 1991. –Paul Ashworth, Capital Economics
  • There is one disturbing trend evident from the household survey… Long-term unemployment is becoming an increasingly pressing issue. The number of those unemployed for 27 weeks or more rose to 4.965 million in July, up from 4.381 million in June. This is easily the highest number on record and, for those who would insist this is meaningless given growth in the labor force over time, it represents 3.21% of the civilian labor force, which is the highest share on record. As of July, 53.5% of the unemployed are so because they have lost their jobs permanently, the highest figure in the life of the data, while 11.4% are on temporary layoff. This is one sign that the current recession has generated a considerable degree of structural, as opposed to cyclical, unemployment, reflecting the amount of excess capacity that had developed in the economy over recent years in areas such as construction, financial services, retail trade, and auto production/sales. Even as the economy recovers, these displaced workers will likely be unemployed for a prolonged period. –Richard F. Moody, Forward Capital
  • Today’s news on employment was far better than expected with a mix of data that portrays near-term optimism that the economy is turning the corner but some indications that the loss in earnings power will be weighing on growth for some time to come. The better numbers reflect hiring by the auto industry and Federal government and a sharp slowdown in the reduction of jobs by temporary employment services. But people aren’t spending and the retail industry continues to lose jobs at an accelerating pace, in particular general merchandise stores. –Steven Blitz, Pangea Market Advisory
  • This was unambiguously a good report, considering the circumstances, and it was far better than what the market was expecting. More importantly, with the fall-off in the pace of job losses appearing to be gaining some traction and the improved tone of other economic reports, it appears that the U.S recession may well be in its last throes.r –Millan L. B. Mulraine, TD Securities