We continue to count down to the double dip: 10 - 9 - 8 - 7. The unemployment report today shows that the slowdown is accelerating. Jobs dropped 125k, and because the workforce fell faster by 652k the unemployment rate actually improved to 9.5% (see chart).
Taking out the census workers, we actually increased by 100k, but a tell of the poor state of the economy is that temp workers only increased by 20k, the smallest in a while. Temp workers typically lead permanent hiring by four months. Not happening. While the numbers fall within expectations, Goldman's take is "much weaker than headlines suggest." You can see how after steady improvement during the Hope Rally, we have now had a fairly large drop to negative in one month:
The BLS runs a separate Household survey, which tends to be more volatile (larger swings) but has been more positive for the past six months than the widely-repported Establishment survey. It also tends to be a better leading indicator. For June, it too disappointed, with a 322k drop. The normally optimistic Califia Beach Pundit is morose in interpreting the next chart:
Looking at the trend in both, using Dec. '09 as the low, the two surveys show a total of between 600K (establishment) and 1 million (household) jobs have been created in the private sector this year. The truth probably lies somewhere in between; jobs probably are up this year at an annualized pace of about 1.5%, and that's not very impressive. In good times, jobs rise 2-3% per year.
UPDATE: a recurring issue with the BLS numbers is their birth/death model (of companies, not employees!) which may be misleading during this period because it is based on models from the Great Moderation. Mish in particular has been harping on how the B/D model can be distorting matters. Today Jesse's Café Américain comments on the B/D model, noting how it created 146k imaginary jobs. Jesse also has calculated he seasonal adjustments used by the BLS, and finds them surprisingly small and hence not distortive (note: I think that is fair except during this last holiday sales season, where the adjustments expected too many temp workers and so was depressed leading into Xmas and optimistic leaving it). Jesse comes up with a look at the seasonally-adjusted unemployment numbers without the birth-death model, and finds things are much worse than the BLS would lead us to believe:
One *might* conclude that without the temporary Census jobs and the Imaginary Jobs from non-existent small businesses consisting largely of unemployed people turned consultant, there has been no recovery in net job creation.
One way to parse through the data and get passed these imaginary jobs and other adjustments is to look at total employment. Using BLS data from May and June, we have now lost 652K plus 386k people seeking work, or closing in on 1M in fewer in the workforce in just two months, a huge plunge. These people didn't die or retire; they gave up looking. Perhaps many are at the aged end of the workforce, nearing retirement, but what about new college grads? Roughly 6m grads in 2010 (college and high school), a significant group of which should have entered the workforce. Instead, teenage jobs added in June is the lowest since 1951. Ouch. This chart from CalculatedRisk shows how we are bouncing along the bottom of employment:
In addition, total workforce is dropping again after a brief bend up:
No surprise that the weekly ECRI indicators continue to drop, now down to -7.7%. At this pace (a percent a week) it will confirm a coming double dip in three weeks, when we get below -10%.
Most telling is that factory orders fell more than expected, showing the recovery is withering on the vine. Manufacturing had been a bright spot, but orders just dropped the most since March 2009, and manufacturing expanded at the slowest pace this year. With housing in the biggest drop ever, autos slowing, stimulus ebbing and inventories back in balance, what is left to drive growth? Europe is tanking and China is slowing, so no help from exports.
While all the indicators are showing slowdown, not a dip to negative, their trend down says we will soon dip. Projecting this out shows skimming the treetops in Q4 and a dip in Q1.