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	Name:	Council Roc Doc -
	Subject:	Todays headlines
	Date:	8/7/2009 10:13:55 AM

Archie, before I jump, I like to read what these numbers really mean. Take a gander at this:

Employment Situation Report - July
The Market Ticker
Friday, August 7. 2009
Posted by Karl Denninger in Macro Economics at 08:59
Employment Situation Report - July

Let's talk about the employment report:

Nonfarm payroll employment continued to decline in July (-247,000), and the unemployment rate was little changed at 9.4 percent, the U.S. Bureau of Labor Statistics reported today. The average monthly job loss for May through July (-331,000) was about half the average decline for November through April (-645,000). In July, job losses continued in many of the major industry sectors.

That's the headline.

Now let's look inside, and see if we find actual "green shoots".

Among the major worker groups, unemployment rates for adult men (9.8 percent), adult women (7.5 percent), teenagers (23.8 percent), whites (8.6 percent), blacks (14.5 percent), and Hispanics (12.3 percent) were little changed in July. The unemployment rate for Asians was 8.3 percent, not seasonally adjusted. (See tables A-1, A-2, and A-3.)

Ok, that's not bad. Not getting worse isn't getting better, but it IS "not getting worse."

In July, the average workweek of production and nonsupervisory workers on private nonfarm payrolls edged up by 0.1 hour to 33.1 hours. The manufacturing workweek increased by 0.3 hour to 39.8 hours. Factory overtime was unchanged at 2.9 hours. (See table B-2.)

This is the first upward move in hourly workweek; that is a legitimate improvement, and one of the four items that is in my "must improve" list before economic recovery can be signaled. I need two more positive sequential prints to confirm a trend change.

The change in total nonfarm payroll employment for May was revised from -322,000 to -303,000, and the change for June was revised from -467,000 to -443,000.

That's a problem but its in the rear-view mirror.

Now let's talk about the bad news.

The civilian labor force participation rate declined by 0.2 percentage point in July to 65.5 percent.

This is extremely bad news.

The participation rate must be adjusted back out of the unemployment numbers because those who are not looking for jobs - who have "dropped out" of the workforce - are no longer counted as "unemployed" but they sure count when it comes to consumer spending and thus impact on GDP.

Looking down the release at Page 19 we see that on an unadjusted basis there was no change in unemployment rate (as opposed to a slight improvement) either in U-3 or U-6, and U-5 worsened slightly. This comparison shows that the shift to forcible part-time work - that is, those who are working part-time but want full-time employment, is continuing, and belies any claim of overall improvement.

The general tone of this report thus is characterized as mildly positive on-balance, with the caveat being the forcible shift to part-time employment. When looked at in the context of the expected summer employment boost (e.g. theme parks, hospitality increase for summer vacations, etc) the report is rather nasty however - the usual seasonal spike that one would see in the unadjusted data is greatly muted, signaling caution for the durability of any "improvement" that one might expect to see going forward.

Key will be whether that hiring in fact took place (and masked other weakness, which from a perusal of the internals of the report it appears may have happened) or whether there was simply no hiring at all, in which case this improvement may signal a true organic shift of some sort.

It is for this reason that I require at least two (and preferably three) months of improvement in hours-worked before I call the indicator for employment slack as having turned around.

Beware Archie, that bump in your second quarter 401K is a red herring.