Repeat of old article. Don't have time to update new one. It will be updated regularly from September 9th, 2012.
Today's US Job report was great and unemployment rate dropped to 8.3%. Nonfarm jobs was 243k of which 257k jobs were private job while Government jobs were -14k. Overall hourly wage and average work week was good as well.
Yesterday the stock market was up by 150 points in an anticipation that the job report would come out terrific, but it got disappointed. The employment rate came down to 8.6%, with 120k new position added for the month of November.
Now lets look beneath the surface. Labor participation rate was 63.7% and a year ago it was 64.2% Employment population ratio was 58.5% which is higher then 58.4% last year. http://www.bls.gov/news.release/empsit.a.htm
Unemployment rate = 1 - (employment population ratio/labor participation rate)
= 1 - (58.5/63.7%) = 8.16%
If you remember my last article on December job report, http://www.freefdawatchlist.com/2012/01/reason-for-dow-nasdaq-and-s-500- sell.html Unemployment rate was 8.593% but Government took 8.5% as the headline number.
But this time Government became too generous and so they used unemployment rate at 8.3% instead of 8.1%
This is all mathematical game which the government play with their seasonal adjustment.
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Now lets take other scenario, the participation rate has been declining and it was huge drop from 64% to 63.7%, i.e. it by dropped 0.3% which is equivalent to 1.2 million people. If the drop in participation rate continues this way, it will reach 58.5% in 14 month time. ( 5.2%/0.03% = 14 )
Unemployment rate = 1 - (employment population ratio/labor participation rate)
= 1 - (58.5/58.5%) = 0%
So by the time next President join the office, US unemployment rate will be 0%.
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Coming back to jobless claim report as you know is published on Thursday at 8.30 EST. The jobless claim on an average has been coming at 375k every week. So the total jobless claim for a month is 1.2 million. Now lets compare monthly jobless claim with non farm payroll for 1 year.
Non farm payroll in Jan 2011- Jan 2012:
Jan : 36000; Feb: 216000; Mar: 216000; Apr: 24400; May: 54000; Jun: 18000 Jul: 116000; Aug: 0 Sept: 103000; Oct:: 80000; Nov: 120000 Jan 2012: 243k
Monthly Jobless Claim from Jan 2011 - Jan 2012:
Jan : 1.7 M; Feb: 1.6M; Mar: 1.6M; Apr: 1.6M; May: 1.6M; Jun: 1.6M Jul: 1.6M; Aug: 1.6M; Sept: 1.6M; Oct: 1.6M Nov: 1.59M Jan: 1.23 million
So if you look at the overall job report, overall million people are losing job but new job added is 243k. This number isn't good by any means but if it continues then its good sign for the economy. I wished we had a better President, Mitt Romney is not good either.
