Critics of the President will be hard pressed to find a point of argument on the labor front for a while. The reason being: November's Employment Situation Report offered decidedly good news.
When reported a month ago, October's unemployment rate jumped into double-digits, reaching 10.2% and spurring harsh criticism of a president who inherited an economy on the downslide. Every dog has his day, but on Friday, the raving maniacs of political mind and of elephant bent would have been smart to keep quiet. You see, November's unemployment rate improved to 10%, giving Democrats at least a month to bask in the potential for economic recovery. Economists surveyed by Bloomberg had been looking for an ongoing 10.2% unemployment rate for November. However, Wall Street’s joy did not last, as stocks gave back most of their early gains before the close. For the week, the Dow Jones Industrials Index was only up about one percent.
The Nonfarm Payrolls data was simply fantastic, relatively speaking. Nonfarm Payrolls showed a net shedding of only 11,000 jobs in November, versus economists’ consensus view for –100K. The improved rate of decline compared against October's revised rate of -111,000 (improved from -190K). The data also matched against a prior three-month average rate of loss of 135K.
Continued losses in Manufacturing (-41K) and Construction (-27K) were offset by enthusing gains in important first-mover areas. Temporary Employment, where businesses first look for new help, improved by 52K. Since September, improving demand for temporary help has led to the net hiring of 117K Americans. This news perhaps offers a starting point for consideration of the shares of employment firms Robert Half (RHI), Korn Ferry Int'l (KFY), Manpower (MAN) and Monster World Wide (MWW). Professional and Business Services, within which Temporary Employment is categorized, improved by 86K.
We also found reason for cheer within the bad news bits. While Manufacturing and Construction continued to shed jobs, they did so at a significantly slower pace than seen through the first six months of the year.
The Average Workweek improved to 33.2 hours, up from 33.0. As this metric rises, demand for new jobs should be exponentially spurred. We say this due to our view that panic led layoffs to excessive rates versus historical recession period firings. Thus, employers should find themselves short of help on very little demand increase when the time comes.
Those working part-time jobs who would prefer working full-time, or had to take part-time work due to the loss of full-time jobs or hours cut, stayed steady at about 9.2 million. As demand for part-time work rises, pressure increases on the poorest of Americans. This is because many of these folks only qualify for part-time work, and now have a more difficult time finding jobs that fit their skillset.
The government also breaks out those who have been unemployed for a long period of time, and does not include them in the unemployment rate calculation. We know better though... If we include the "Marginally Attached" workforce in the unemployment count, Underemployment sits at 16.3%. Marginally Attached Workers are those who have not sought a job in the past four weeks, while “Discouraged Workers” are those who believe they simply cannot find work now.
Underemployment clearly impacts consumer spending, but we suspect that as employment improves, spending would see a burst of activity. One thing is certain - President Obama has an economic leg to stand on now.
Disclosure: No Positions