Saturday, December 04, 2010

ISM Employment Indexes Above Fall 2007 Levels


"All is not doom and gloom on the economy. There is some optimism. In fact, there's a mystery to Friday's jobs report, since it just doesn't tally with all the other good economic news. Retail sales are up four straight months, and chain-store sales for the early holidays surprised on the upside. Manufacturing reports have been solid. Even for November, the Institute for Supply Management's surveys for manufacturing and services were solid. The ISMs are basically real-time economic indicators. And oddly enough, the employment component of each looks fairly strong."

The nearby chart shows the employment indexes from the ISM-Manufacturing and Non-Manufacturing reports for November that were released this week.  The Employment Index for the service sector of the economy increased in November for the fourth month in a row, and for the 9th time in the last 12 months, and is now at a pre-recession level of 52.7, the highest since October 2010.  The index for employment in the manufacturing sector has been above pre-recession levels for the last year now. The positive trends in these employment indexes suggest that the labor market might be stronger than the BLS report, and the "underlying trend in job growth should accelerate in the months ahead," as Brian Wesbury and Bob Stein reported yesterday

27 Comments:

At 12/04/2010 2:09 PM, Blogger Benjamin said...

It may be that the DoL report was a fluke. Still, employment and real estate are struggling.

The Fed needs to pull out all of the stops.

The Japan Wing of the Fed is strong, but I think Bernanke will prevail.

 
At 12/04/2010 4:04 PM, Blogger marmico said...

Only once, in 1965, has the 3 month moving average of the New Orders-Inventory ratio in the ISM Manufacturing Report declined to zero and the ISM Composite Index has not gone into contraction.

Who ya gonna believe? Goldilocks Kudlow or your own lying eyes.

'da chart.

The data says that the probability that ISM Manufacturing Index declines to below 50 (contraction) in the next 3 months is palpably high.

The 2009 recovery, as measured by GDP, has been nothing more than inventory accumulation. Final domestic sales are putrid. The inventory gig is up.

 
At 12/04/2010 4:58 PM, Blogger Dr. T said...

According to the Institute for Supply Management's November statistics, manufacturing employment has been growing for twelve consecutive months and non-manufacturing employment has been growing for three consecutive months. The ISM's employment data are flawed: overall unemployment rates increased in November. Unemployment rates worsened throughout 2009. Since August, 2009, unemployment rates have stayed within narrow limits: 9.5-10.1% (official federal statistics) and 14-18% (true unemployment statistics).

The bottom line: Our financial recovery has stalled, and our employment recovery is nonexistant.

@Benjamin: The Federal Reserve already has taken too many wrong actions. By reducing interest rates to nearly zero, those with savings have been hurt financially. By creating hundreds of billions of dollars out of thin air, the Fed has set us up for inflation that will strike when (if) the economy recovers. This will again hurt those with savings (while benefiting those with debt, particularly our federal government). Policies that repeatedly hurt persons and corporations who have savings always are bad for the economy in the long run.

 
At 12/04/2010 5:45 PM, Blogger Benjamin said...

Dr. T:

Some quarters have been warning about inflation for years now. Instead, we have a sinking core CPI, and falling unit labor costs, and real estate prices in the toilet. We have the lowest recorded rates of inflation since 1962 (?) and some say the CPI overstates true inflation.

On the savers vs. borrowers argument: If rates comes down, if hurts savers and helps borrowers--and it is borrowers who create jobs, build businesses and develop real estate.

Can't see the moral virtue in this argument--if anything, it lies with business borrowers. They are the ones who build our economy.

Study Japan for what happens when a central bank develops a fetish for low inflation. Property and equity values there are down 75 percent in 20 years--and still squishy. They are in their 18th straight month of deflation now, another sustained bout of deflation.

Never, ever let the gold-nut money-fetish crowd get control of your central bank. If that happens, buy government bonds, shut down your business, and take a 20-year nap. Like Japan.

 
At 12/04/2010 5:50 PM, Blogger aorod said...

People are not going to hire with tax increases looming and health care costs going up.

 
At 12/04/2010 6:51 PM, Blogger Craig said...

Benjamin said:

If rates comes down, if hurts savers and helps borrowers--and it is borrowers who create jobs, build businesses and develop real estate.

Under natural conditions, it is those savers who provide the capital to the borrowers. We have already seen what happens when savings rates drop nearly to zero and the Fed materializes the lending capital in their place.

Boom -- then bust. It hardly makes sense to repeat it.

 
At 12/04/2010 7:49 PM, Blogger Ron H. said...

"On the savers vs. borrowers argument: If rates comes down, if hurts savers and helps borrowers--and it is borrowers who create jobs, build businesses and develop real estate."

Benji, you are missing an important point here. Where do you think the money comes from that is borrowed? Without some deferred consumption, there can't be any growth.

 
At 12/04/2010 10:13 PM, Blogger Benjamin said...

Ron H.--What we have now is a gut of savings--globally. Gobs of money in corporate bank accounts, gobs of money in money market funds, every Treasury auction oversubscribed....money on the sidelines in hedge funds, private equity funds, sovereign funds etc.

There was a time when I was growing up we talked about "crowding out," the federal government pushing out others from debt markets.

Those days are over--the globe has capital gluts.

If savers do not buy Treasuries, or corporate bonds, where do they go? It would be great if they start spending or really investing their money,

Get used to it: Capital is abundant and cheap.

 
At 12/05/2010 1:55 AM, Blogger Darren said...

This comment has been removed by the author.

 
At 12/05/2010 3:35 AM, Blogger Ron H. said...

"Gobs of money in corporate bank accounts, gobs of money in money market funds, every Treasury auction oversubscribed....money on the sidelines in hedge funds, private equity funds, sovereign funds etc."

And if this toilet is plugged as you describe & near overflowing, what do you suppose the correct solution was? To flush again in the form of QE2?

 
At 12/05/2010 9:58 AM, Blogger juandos said...

"Gobs of money in corporate bank accounts, gobs of money in money market funds, every Treasury auction oversubscribed....money on the sidelines in hedge funds, private equity funds, sovereign funds etc"...

Why should the owners and managers of this money take a chance on spending/investing these 'gobs of money' when there's no confidence in this questionable administration and its enablers in the leftist/progressive Congress that are making future conditions for business very dicey?

 
At 12/05/2010 4:18 PM, Blogger juandos said...

Over at the Pragmatic Capitalist the apparent attitude over these ISM numbers isn't as optimistic...

IS THE ISM NEW ORDERS:INVENTORIES SENDING RECESSION WARNING?

'The latest ISM Manufacturing report was once again very strong. But a look at the underlying data shows what might be a potential red flag'...

 
At 12/05/2010 6:12 PM, Blogger Benjamin said...

Ron H.

When the toilet is plugged, the proper solution is not to stop crapping. That is what the Republican Party wants and does, causing excretum is escape from other orifices.

The right solution is to clear the plug, and ascend the throne.

You will feel much better!

 
At 12/05/2010 6:39 PM, Blogger juandos said...

"That is what the Republican Party wants and does, causing excretum is escape from other orifices"...

Speaking of which pseudo benny that is exactly what your comment is...

Is this another of your episodic but bizzare 'California dreamin' happenings again?

 
At 12/05/2010 8:49 PM, Blogger Michael Hoff said...

Let's see. The number is surprising because by all appearances, manufacturing and non-manufacturing jobs are increasing. At the same time, dems are trying to make a political issue (shocking, I know) out of expiring unemployment benefits.

Hmm. Could it be that they fudged the unemployment number in order to sway public opinion in the benefits debate against those mean, heartless republicans who don't want to help the unemployed?

Um... Yes.

 
At 12/06/2010 1:49 AM, Blogger Plamen said...

Benjamin, would you please reconcile these two statements of yours:

1) "The Fed needs to pull out all of the stops."

2) "Get used to it: Capital is abundant and cheap."

 
At 12/06/2010 11:57 AM, Blogger juandos said...

"Could it be that they fudged the unemployment number..."...

Someone at the American Thinker had a somewhat similer thought: Fantasy Figures, Real Pain

(skip)

The real question is, Why are there so few jobs being created? A severe recession like the one we experienced in 2008-2009 is supposed to be followed by a rapid, "V-shaped" recovery. That is what happened following nearly every previous recession. But it is not happening this time. So what's different?

The difference is that Democrats have spent the last two years engaged in an orgy of new spending, regulation, litigation, and taxation -- all of it squarely aimed at America's most successful businesses. Among the thousands of new regulations in the health care reform bill and the Dodd-Frank financial reform legislation is a potentially devastating requirement that retailers report whether their goods contain "conflict metals": gold, tungsten, and the like mined in war-torn Central Africa...

 
At 12/06/2010 12:15 PM, Blogger Benjamin said...

Plamen:
The Fed needs to follow Milton Friedman's advice, and print money until we get solid economic grwoth and mild inflation.
Google Japan, Hoover Institution and Milton Friedman, and read up on Firedman's report in Hoover Institution website, re Japan.

The Nipponistas want a Japan replay here. Don't let them prevail.

 
At 12/06/2010 12:54 PM, Blogger Ron H. said...

"The Fed needs to follow Milton Friedman's advice, and print money until we get solid economic grwoth and mild inflation."

Benji, You didn't answer Plamen's question. If money is abundant and cheap, why should the Feds print more? Your response to me also missed the mark by a long shot. You offered no suggestions on how to remove the plug, nor did you explain why you thought flushing again was a good idea.

 
At 12/06/2010 12:54 PM, Blogger juandos said...

"The Fed needs to follow Milton Friedman's advice, and print money until we get solid economic grwoth and mild inflation"...

Whoa!

Milton Friedman actually said that?!?!

Surely you jest pseudo benny or do you have a credible source for that supposed statement?

 
At 12/06/2010 1:02 PM, Blogger juandos said...

Hot flash from the Business Insider: The Jobless Recovery: 25 Unemployment Statistics That Are Almost Too Depressing To Read

 
At 12/06/2010 1:43 PM, Blogger Benjamin said...

Ron, et al-

Sorry, once toilets are introduced, all I can think of are toilet-poop jokes.

http://www.hoover.org/publications/hoover-digest/article/6549

The link above is Friedman's advice to Japan, and to America too.

Did you ever see the very funny movie, "No Time for Sargeants," starring Andy Griffith? The toilet scene is to die for.

 
At 12/06/2010 3:46 PM, Blogger Ron H. said...

Benji, rather that invoking Friednman, whose recommendation was intended to increase bank reserves under very different circumstances, you need to explain why already high bank reserves should be increased even more.

 
At 12/06/2010 3:55 PM, Blogger juandos said...

Hey pseudo benny thanks for the link: Reviving Japan...

I think you might take another look at the article and consider what Ron H is saying in his comment...

 
At 12/06/2010 4:40 PM, Blogger Benjamin said...

Please see this link, whihc should answer your questions...

http://delong.typepad.com/sdj/2010/11/milton-friedman-suppors-ben-bernanke-on-qe.html

Friedman would be in the QE2, maybe even advocate more forceful actions.

BTW, Friedman thought the gold standard was for semi-religious nuts....

 
At 12/06/2010 6:24 PM, Blogger Ron H. said...

"Please see this link, whihc should answer your questions..."

No, Benji, it doesn't. You are again quoting Friedman as channeled by Irwin,through Beckworth, through DeLong. It's a ridiculous stretch to compare Japan in 2000 with the US today.

I would love to hear in your own words why you think more money is needed on top of an already abundant supply of cheap money.

 
At 12/06/2010 9:28 PM, OpenID Sprewell said...

Benjie, you do contradict yourself by saying that capital is so readily available but more pump priming is necessary. In that article by Friedman, he says that Japan should increase its money supply but counsels against overdoing it as in the past. His argument is that one can have too low money growth and one can have too high and in Japan's case it was arguably too low in the low 90's and he says it should have been raised a bit.

As for our current situation, Bernanke knows exactly what he's doing when it comes to monetary reserves, he pumped a trillion dollars into banks' coffers and is ready and waiting to take it out when the economy recovers. Where he possibly erred is in buying so many mortgage-backed securities the first time around, $1 trillion worth, and another half trillion in govt bonds now, effectively spreading those losses on the taxpayer. Another big concern is if he will be independent enough to pull out those reserves to nip inflation in the bud as the economy starts growing, if he can weather the hail of criticism that's sure to come his way that he's pulling out too soon and "killing" the recovery. All in all, he knows what he's doing, but he's perhaps doing too much and taking too many risks: QE2 is very likely another mistake, forget about more.

 

Post a Comment

Links to this post:

Create a Link

<< Home