What Unemployment Numbers Can We Expect?

Here is how the employment numbers are shaping up:

This week we saw the ADP employment numbers and they were slightly worse than anticipated. That shook the markets on Wednesday. Then on Thursday, we saw the weekly initial jobless claims numbers and while they were better than expected (550k vs. 580k estimated) the continuing claims were revised showing that actually more people were continuing to receive unemployment benefits and the actual number for this week was 29,000 higher than estimated.

Now, on Friday morning we are looking at a very important number that provides us with the “official” unemployment rate as well as the change in total non-farm payrolls for the month. While this number has been steadily moving down since March, we are still seeing a good amount of additional people out of work as the rate is now at 9.5%. It is estimated that that will go to 9.6%.

In addition, the wage data will be released with the report and we will see if the deflationary cycle is holding down incomes. This and the unemployment rate may have a direct impact on consumption, causing a further drop in economic activity. We saw this very clearly today as the retail establishments released monthly same store sales. Overall all they were not encouraging.

Consumers are still entrenched, repairing their balance sheets and increasing their savings. Of course this has an effect on the equity markets.

Now, the important point to make is that there are few late entries to the estimates as of Thursday. Deutsche Bank is now estimating that we will see a 150k decline and a well timed release (3pm) by Goldman Sachs is betting that we will see a 250k decline. Both of these are well outside the mean and would be well received if they are right.

Even if we come in at 350k, that would be a good number and shows that layoffs are slowing and/or employers are opting for part-time labor over firings.

Disclosure: Horowitz & Company clients may hold positions of securities mentioned as of the date published.

Comments

[Prudent Man...:]

With all of the "emergency" Novocaine the collectivists have poured into the economy in order to consolidate their economic power it would be surprising not to see some relief. What one should be concerned with is the law of diminishing returns. There is a point when Novocaine doesn't work anymore as the patient has become immune to it.

When market participants buy into Robert Shiller's(the intellectual without intellect) warmed over Keynesianism combined with psychobabble all bets are off. Remember that when you have economic pancreatic cancer that it is all in your mind and you don't have to do anything but be happy. The mindlessness of Woodstock redux
- what happened to our economy the decade after the national "buzz"? One big hangover!

The answer to the thirty years of destruction of our industrial base will be reversed by "cash for trash"? If you believe that you believe in Santa Claus and the Easter Bunny. Time to grow up and out produce the competition so stock prices represent productive value instead of the results of mindless computer trading.

Aug 07 12:38 PM

[Mad Hedge F...:]

this is what you got. Looks like I am going to have to be the designated driver on this one. The Friday nonfarm payroll showing losses of only 247,000, with upward revisions to May and June, is signaling to many that the bull market is back. You might as well put a giant neon sign on your roof saying “party here tonight.” One can never underestimate the animal spirits here. I’m sure the newspapers are going to call the 0.1 % micro improvement in the unemployment rate to 9.4% as the beginning a major trend. But I don’t see any consumer spending on the horizon, and I was able to breeze through my favorite restaurant at lunch because it was still half empty. I think what is really happening here is that having priced in Armageddon in March, we are now pricing it back out. What’s an Armageddon worth? Some 3,000 Dow points, or 350 S&P 500 points, where we are right now, sounds like the right price to me.Let me know when you’re ready to go home, and I’ll pile your inebriated carcasses back into the car. I’ll even take the breathalyzer test.

Aug 07 12:42 PM

[RJMoran:]

The 'average work week' is down to it's lowest level ever at 33 hours. I know from experience that many people just give up looking for work and couldn't therefore be counted in any unemployment numbers. I wouldn't be surprised to find an accurate unemployment count to be closer to 20% than 10%. Who are we kidding!?

Aug 07 01:19 PM