08 January 2010

Poor US unemployment numbers

Change in nonfarm payroll came in worse than expected at -85,000 jobs vs. a consensus of a flat number (range +40.000/-50.000). Revisions showed payrolls increased the prior month for the first time in almost two years at +4.000 and decrease 127,000 in October. Both the number of unemployed persons, at 15.3 million, and the unemployment rate, at 10%, remained unchanged.

Looking at in more details, the numbers are rather bad:
  • Long term unemployed (those jobless for 27 weeks and over) continues to trend up at 6.1 million
  • Involuntary part-time workers were about unchanged at 9.2 million
  • Workers marginally attached to the labor force (want to work and are available for work but did not seek a job for at least 4 weeks) dramatically rose to 2.5 million (+578,000 over December last year)
  • Among these 2.5 million people, workers discouraged to seek a job increased by 642,000 compared to last year, for a total of 929,000
  • The civilian labor force participation rate fell to 64.6 percent in December. The employment-population ratio declined to 58.2 percent
If we add unemployed persons to workers marginally attached to the labor force, we reach an unemployment number close to 12% I we add the involuntary part-time workers, we are at 17.5% (100% ratio) or 14.5% (50% ratio).

This is on the back of December retail sales that look better than anticipated (+2.8% compared to a year ago according to ISCS sales index). With no improvement in the jobless numbers during the 3-6 coming months, having a negative effect on 1) would be consumers sentiment and 2) disposable income, there is a real risk that annualized growth recedes in 2010.


Bureau of Labor Statistics: Employment Situation Summary

Bloomberg: Payrolls in U.S. Drop 85,000; Unemployment at 10

Yahoo!: December retail sales show signs of life