Jobless Still Jobless- Teens Hired For The Summer
Oh wait, we are at 9.1% unemployment. When you drill down into the “surge” in employment you find that 130,000 jobs were created in the “services” sector. For those of you who don’t know what this means – it is simply the high school kids that just got hired for retail jobs for the summer and “back to school” shopping season. With the ADP report if you work one (1) hour in a week you are considered employed. Therefore, don’t put a lot of stock into today’s report, although the market is, as it means little relative to the trends of employment that are witnessing which hasn’t been enough to offset the growth in the population from month to month.
This is the 13th straight week of employment claims running above 400,000 and this is inclusive of the droves of people falling off of their 99 weeks of unemployment into that mystical place called “having given up looking for work” where they are no longer counted at all. This is why you see the number of people “still receiving benefits” under state programs dropping by 43,000 this month to 3.68 million people. Most of those are not the people that just got hired for the summer work season.
Also, 6 states (12% of the country) had to “estimate” their numbers due to the 4th of July holiday. This is an usually large number of states and is sure to skew the number to the positive so expect a rather large increase in claims next week when this week’s number is adjusted. By the way, last week’s number was revised up 4,000 claims to 432,000.
The real issue here is that companies are working off a temporary hiring base to only meet the incremental rises and falls in demand. The reason that we are creating sustainable long term employment growth is that the final demand from consumers is not sufficient to spark businesses into an expansion process.
Chief economist for the National Federation of Independent Business (NFIB) William C. Dunkelberg, issued the following statement on June’s job numbers, based on NFIB’s monthly economic survey that will be released on Tuesday, July 12, 2011. The survey was conducted in June and reflects 766 randomly-sampled NFIB members to wit:
“New jobs are not to be found on Main Street. For small firms, reported job losses per firm declined sharply in June, as did the net percent of firms that increased employment over the last three months. A seasonally adjusted net negative 7 percent of owners increased employment, a 4 point increase from May.”
“Seasonally adjusted, 9 percent of owners hired new employees last month, a 1 point decline from May, while 16 percent reduced employment, a 3 point increase. The remaining 75 percent of owners made no change in employment. Manufacturing was the only winning sector to post average positive net growth; but job losses were posted by firms in financial, non-professional services, construction, negating any gains made.”
“The poor recovery in the jobs numbers is a result of very low housing starts activity and lagging expenditures on ‘services,’ both labor intensive industries dominated by small firms. The most recent reports on consumer spending show continued weakness (except paying more for food and gas) and housing starts show no hope for much job creation in construction.”
“But overall, the June employment numbers quashed any hope of establishing positive trend in job creation. It was a serious reversal.”
Don’t forget – those small businesses that are representative of those surveyed by the NFIB account for 70% of the job creation in the U.S. So while today’s number was a nice number for today – today’s number very likely doesn’t indicate much about the future. We will see what tomorrow's job report looks like but we would expect around 150,000 non-farm payrolls tomorrow which is sure to get the bulls all excited once again.