Vital Signs: Jobs Report Looks Dismal
The labor markets will be front and center this week, as Wall Street awaits the Labor Dept.’s employment report for February. The numbers will look pretty dismal. Payrolls in January shrank by nearly 600,000 workers, and job market conditions in February appear to have deteriorated even further.
The recent pattern of new filings for unemployment insurance foreshadows the bad news. Jobless claims have been rising at an ever faster rate since mid-September, reaching 667,000 per week for the week ended Feb. 21. Claims had averaged 561,000 per week in January, and so far in February, they are running at 642,000 per week, a level historically consistent with a monthly payroll decline near 700,000 workers. If that’s the case, total job losses since December, 2007 would total 4.3 million, nearly 3 million of which would have occurred since September.
The intensification of the credit crunch after September forced a sea change in the hiring and firing patterns of businesses. Through the third quarter of last year, the great majority of companies had reduced their payrolls mainly through attrition and hiring freezes, while not resorting to outright layoffs. That pattern shows up in the sharp decline in the Labor Dept.’s hiring rate, even as the separations rate held steady. The net effect was falling payrolls.
Now, within the past few months, the rate of separations, mainly involuntary, has spiked higher, as businesses have begun slashing payrolls in the face of sharply weaker orders and sales. In fact, the share of newly unemployed workers who have been permanently laid off, as opposed to temporary layoffs or temp workers whose job has been completed, rose to a record 48% in January, far exceeding the level reached in the 1981-82 recession, when the jobless rate peaked at 10.8%. Even more significant, the share of unemployed workers who are dropping out of the labor force, that is, no longer looking for a job, rose to a record 51% last month.
The claims data also portend another perhaps steep rise in the unemployment rate. The total volume of workers on jobless benefits on Feb. 14 stood at a record 5.1 million. More important, the jobless rate for insured workers continues to rise rapidly, hitting 3.8% on Feb. 14, up from 3.6% a month ago. That rise translates into a 0.2 to 0.3 percentage point rise in the overall jobless rate. Economists think the February rate could hit 7.9%, up from 7.6% in January, and 7.2% in December.
Against the dour backdrop of the labor markets, there is little reason to expect any stabilization in consumer spending, business outlays, or housing demand any time soon. Economists project the economy will contract this quarter about as fast as it did in the fourth quarter. They expect some moderation in the rate of decline during the spring, as excess inventories are worked off, but any recovery in demand is unlikely before the second half, at best.
Here’s the weekly economic calendar, from Action Economics:
|Reports||Date||Time||For||Median Estimate||Last Period|
|Personal Income||Monday, Mar. 2||8:30 a.m.||January||-0.2%||-0.2%|
|Personal Consumption Expenditures||Monday, Mar. 2||8:30 a.m.||January||0.3%||-1.0%|
|ISM Index (Manufacturing)||Monday, Mar. 2||10:00 a.m.||February||34.3||35.6|
|Construction Spending||Monday, Mar. 2||10:00 a.m.||January||-1.1%||-1.4%|
|Domestic Auto Sales (Millions)||Tuesday, Mar. 3||afternoon||February||3.0||2.9|
|Domestic Light Truck Sales (Millions)||Tuesday, Mar. 3||afternoon||February||4.0||4.0|
|ISM (Nonmanufacturing)||Wednesday, Mar. 4||10:00 a.m.||February||41.0||42.9|
|Nonfarm Productivity (Revised)||Thursday, Mar. 5||8:30 a.m.||Q4||2.0%||3.2%|
|Unit Labor Costs (Revised)||Thursday, Mar. 5||8:30 a.m.||Q4||2.9%||1.8%|
|Factory Orders||Thursday, Mar. 5||10:00 a.m.||January||-1.7%||-3.9%|
|Nonfarm Payrolls (Thousands)||Friday, Mar. 6||8:30 a.m.||February||-600||-598|
|Manufacturing Payrolls (Thousands)||Friday, Mar. 6||8:30 a.m.||February||-165||-207|
|Unemployment Rate||Friday, Mar. 6||8:30 a.m.||February||7.9%||7.6%|
|Average Hourly Earnings||Friday, Mar. 6||8:30 a.m.||February||0.2%||0.3%|
|Average Weekly Hours Worked||Friday, Mar. 6||8:30 a.m.||February||33.3||33.3|
|Consumer Credit ($Billions)||Friday, Mar. 6||3:00 p.m.||January||-$5.0||-$6.6|
|SPEECH: Boston Fed President Rosengren||Monday, Mar. 2||11:30 a.m.|
|SPEECH: Richmond Fed President Lacker||Monday, Mar. 2||12:45 p.m.|
|ICSC-UBS Store Sales||Tuesday, Mar. 3||7:45 a.m.||Feb. 22-28|
|Johnson Redbook Weekly Store Sales||Tuesday, Mar. 3||8:55 a.m.||Feb. 22-28|
|SPEECH: Atlanta Fed President Lockhart||Tuesday, Mar. 3||8:00 a.m.|
|Pending Home Sales Index||Tuesday, Mar. 3||10:00 a.m.||January|
|Mortgage Applications||Wednesday, Mar. 4||7:00 a.m.||Feb. 22-28|
|ADP Employment Report||Wednesday, Mar. 4||8:15 a.m.||February|
|SPEECH: Dallas Fed President Fisher||Wednesday, Mar. 4||8:30 a.m.|
|SPEECH: Atlanta Fed President Lockhart||Wednesday, Mar. 4||12:00 p.m.|
|Federal Reserve Beige Book Report||Wednesday, Mar. 4||2:00 p.m.||February|
|Initial Unemployment Claims||Thursday, Mar. 5||8:30 a.m.||Feb. 22-28|
|TESTIMONY: Treasury Secretary Geithner||Thursday, Mar. 5||10:00 a.m.|
|SPEECH: Atlanta Fed President Lockhart||Thursday, Mar. 5||12:45 p.m.|
|American Capital (ACAS)||Monday, Mar. 2|
|Pepco Holdings (POM)||Monday, Mar. 2|
|Edison International (EIX)||Monday, Mar. 2|
|AutoZone (AZO)||Tuesday, Mar. 3|
|MBIA (MBI)||Tuesday, Mar. 3|
|Big Lots (BIG)||Wednesday, Mar. 4|
|Ciena (CIEN)||Thursday, Mar. 5|
|Costco Wholesale (COST)||Thursday, Mar. 5|
|H&R Block (HRB)||Friday, Mar. 6|