The BLS Employment Situation Report was much worse than expectation. The headline is +18,000 jobs. By comparison, prior was +54,000, Consensus was around +100,000 and the number of new jobs which need to be added each month to keep the same percent of the population working is around 121,000. Private jobs were +57,000 while government jobs were -39,000. State and local governments whose cash flow has been hammered by declining real estate values and other taxes are nowhere near the end of downsizing and declining government jobs will be a feature of the BLS Employment Sitiation Report until that downsizing is complete. Health Care added 17,400 jobs. Goods producing added 4,000. Temporary help was down 12,000. This is significant because temporary help is generally a leding indication for jobs.
The Unemployment Rate increased to 9.2%.
This situation has been created by two forces: manufacturing jobs continue to be offshored. The average factory worker in China makes about 75 cents an hour. According to this BLS report the average hourly earnings of production and nonsupervisory employees on goods producing nonfarm jobs was $20.62 last month.
More than 4,000,000 people who want jobs have been out of work for over 1 year. The portion of the population in the jobs market (labor-force participation rate) fell to 64.1% last month. That is the lowest it has been since 1984. While much of this is demographic (more seniors) it is still a problem because social security and medicare payments must be made from current tax receipts or borrowing because the funds have been squandered.
The ficsal side stimulus of 2009 has failed and monetary policy has done little but increase the flow of speculative rather than transactional money.
The underlying problem is that the consumer lacks the confidence necessary to spend. The consumer is 1) worried about his/her job and 2) overleveraged and perhaps underwater on the mortgage.
The fact is that the government can do little to better the jobs situation. Only two forces can get us out of this hole: 1) a boom in new areas of tech and 2) a return of Consumer Confidence.
A longer term and somewhat esoteric view of where the jobs market is going will be presented in my RateWatch newsletter later today.