The contrast between what was generally reported on television and what the Weekly Jobless Claims Report really conveyed was clashing. Before reviewing the materials, and based solely on what was seen and heard on the nightly news and business radio, you might have thought there was a dramatic improvement in the labor situation this week. Yet, after just a glance at the data, I was left nodding my head and repeating to myself the usual complaints about the popular press.
The best of the data was promoted and exaggerated, with the news keying on the 5,750 decrease in the four-week moving average for jobless claims. At 375K, the press noted, the average of the claims count reached a comparable point of a previous period which made it to seem like a sign of real change. But with its focus on the average, the press, at least what I watched and heard, lied by omission. That’s because weekly jobless claims actually increased in the period ending December 24 (the reported period), rising by 15,000 over the revised prior week result, to 381K.
We have seen milder claims over the last month, yes, but the press continues to overlook the fact that it is Christmas. Who among us is going to time their layoffs during this warm holiday period also known for the depression of those struck with tough luck? Has our society become so hard-hearted that the production and copy editors at these media outlets do not even consider the fact? Over the last several weeks, I’ve pointed this out, and I continue to believe the seasonal adjustment for the holiday is likely inadequate in such a dynamic period. I recall noting lulls in unemployment activity at this same time in recent prior year periods. Just as I did then, I now warn those who are betting on economic improvement based on this latest news, to temper enthusiasm until after another full month of data comes through.
The report also notes, and I report it regularly, changes in insured unemployment. This week’s data, covering the period ending December 17, showed an increase of 34,000, to 2.9%. Of those people collecting a benefit of some sort, including the unemployment benefit extension program, there was an increase of 79,385 in the period ending December 10, to a total count of 7,231,514. Many of these long-term unemployed Americans are now exhausting their 99 weeks of benefits, and are falling out of the workforce count, moving in with mother, and basically losing all hope. So, you might also want to reconsider what the press has been reporting about consumer spending over the holidays, which we have also exposed as farce here.
You can be certain that the closing of Sears’ (SHLD) 100 stores will also mean a significant number of layoffs. As the retail sector shakes out further, we’ll see more of the same, especially as retailers begin to report results in 2012. Interestingly enough, the Bureau of Labor Statistics monthly report of mass layoffs (50 or more) showed general improvement in October and November. One sector that continues to lay off workers is the public sector, due to tight budgets on less revenue generation. Manufacturing continued to drop a good amount of workers in November as well, reported on December 22.
There have been some notable corporate layoffs announced recently. Susquehanna Bancshares (SUSQ) will reportedly shed near 350 employees in Pennsylvania and Maryland, based on filings it made with the labor departments of both states this month. Morgan Stanley (MS) is laying off 580 New York employees, based on data it filed with the government. The company expects to reduce its workforce by 1600 by the first quarter of 2012. Whirlpool (WHR) is moving a plant from Arkansas to Mexico, replacing approximately 1,000 American workers. The list is long, but the lay-off plans are likely arranged around the holidays, as hearts still exist in this world.
Meanwhile, the shares of employment services firms like Robert Half (RHI), Korn Ferry (KFY), Manpower (MAN), Monster Worldwide (MWW) and Kelly Services (KELYA) have all had a positive last three months of the year, with Robert Half and Korn Ferry up 30-40% through the period. These gains should come against pressure now in my view, and very likely will face some profit-taking in the early part of 2012.
In conclusion, I suggest a tempered digestion of news headlines that are geared to keep your interest and draw you to return for more. Rather, look for analytical discussion of these economic data from those of us willing to sift through the bland details for you. Perhaps even more importantly, find the views which offer insight and which find nuances that may be missed by the popular press. Thus, be wary of the so-called latest employment and consumer trends, which mask a human quality of compassion and which ignore temporary drivers of activity, despite seasonal adjustments. They are imperfect and sometimes inadequate in a dynamic environment.