by Calculated Risk on 3/04/2011 10:25:00 AM

Here are a few more graphs based on the employment report ...

Percent Job Losses During Recessions

Click on graph for larger image in graph gallery.

This graph shows the job losses from the start of the employment recession, in percentage terms - this time aligned at the start of the recession.

In the previous post, the graph showed the job losses aligned at maximum job losses.

In terms of lost payroll jobs, the 2007 recession is by far the worst since WWII, and the "recovery" for payroll jobs is one of the slowest.

Part Time for Economic Reasons

From the BLS report:

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was essentially unchanged at 8.3 million in February. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job.

The number of workers only able to find part time jobs (or have had their hours cut for economic reasons) declined slightly to 8.34 million in February from 8.407 million in January.

These workers are included in the alternate measure of labor underutilization (U-6) that declined to 15.9% in February from 16.1% in January. Still very high, but improving.

Unemployed over 26 Weeks

This graph shows the number of workers unemployed for 27 weeks or more.

According to the BLS, there are 5.993 million workers who have been unemployed for more than 26 weeks and still want a job. This was down from 6.21 million in January. This is still very high.

Summary

This wasn't a great report. Heck, it wasn't a "good" report. But it was a little better than most recent reports.

If we average the last two months together, the 63,000 payroll jobs added in January and the 192,000 payroll jobs in February, that gives 127,500 payroll jobs per month. And that is a barely enough to keep up with the growth in the labor force. Private payrolls were a little better at an average of 145,000 per month, as state and local governments continued to lay off workers (something we expect all year).

The decline in the unemployment rate from 9.0% to 8.9%, was good news, especially since the participation rate was unchanged at 64.2%. Note: This is the percentage of the working age population in the labor force.

The decreases for the long term unemployed, and for the number of part time workers for economic reasons, and the decline in U-6 to 15.9% is all welcome news - although the levels are still very high.

The average workweek was unchanged at 34.2 hours, and average hourly earnings ticked up 1 cent. Both disappointing.

It is interesting to note that construction has now added payroll jobs in 2011. I think construction will add payroll jobs this year for the first time since 2005.

Overall this was a small step in the right direction.

• Earlier Employment post: February Employment Report: 192,000 Jobs, 8.9% Unemployment Rate

by Calculated Risk on 3/04/2011 08:30:00 AM

From the BLS:

Nonfarm payroll employment increased by 192,000 in February, and the unemployment rate was little changed at 8.9 percent, the U.S. Bureau of Labor Statistics reported today.
...
The change in total nonfarm payroll employment for December was revised from +121,000 to +152,000, and the change for January was revised from +36,000 to +63,000.

The following graph shows the employment population ratio, the participation rate, and the unemployment rate.

Click on graph for larger image.

The unemployment rate decreased to 8.9% (red line).

The Labor Force Participation Rate was unchanged at 64.2% in February (blue line). This is the lowest level since the early '80s. (This is the percentage of the working age population in the labor force. The participation rate is well below the 66% to 67% rate that was normal over the last 20 years, although some of the decline is due to the aging population.)

The Employment-Population ratio was unchanged at 58.4% in February (black line).

The second graph shows the job losses from the start of the employment recession, in percentage terms aligned at maximum job losses. The dotted line is ex-Census hiring.

The current employment recession is by far the worst recession since WWII in percentage terms, and 2nd worst in terms of the unemployment rate (only the early '80s recession with a peak of 10.8 percent was worse).

This was about at expectations for payroll jobs. Adding January and February together gives 255,000 jobs or about 127 thousand per month. I'll have much more soon ...

by Calculated Risk on 3/03/2011 10:00:00 PM

• Earlier Employment Situation Preview: Some Improvement, but Still Grim.

• From Tim Duy's Fed Watch: Game Changers?

All in all, incoming data reinforce my sense that the upside and downside risks to the forecast are intensifying, which could make for a very interesting few months. ... The possibility of some real game changing developments is at hand. At this moment, I think the balance of risks are now on the upside, but am very, very conscious of how quickly that balance can change in the wake of a commodity price shock. I would be wary about letting the depth of this recession interfere with your read of the data, just as wary as you should be about letting the data tempt you from thinking it is time to push stimulative policies into reverse.

CR: There are several downside risks: higher oil prices or even a supply shock, the European financial crisis, state and local government fiscal issues, and two sides of the inflation coin (inflation spreads or policymakers overreact). We live in interesting times!

• Some interesting thoughts on retail space, from the WSJ: As Big Boxes Shrink, They Also Rethink

Major big-box retailers have been shifting to smaller stores—and scratching around for more profitable ways to fill under-used spaces as they go about reinventing themselves.

Some are becoming landlords, turning excess space over to other businesses.

• Last month Paul Solman at PBS NewsHour Making Sen$e had a lyric contest. Here is the song from Merle Hazard to Paul Simon's The 59th Street Bridge Song (Feelin' Groovy)

by Calculated Risk on 3/03/2011 07:23:00 PM

• Earlier Employment Situation Preview: Some Improvement, but Still Grim. Note: Several analysts have upped their forecasts this afternoon.

Here is the weekly update on hotels from HotelNewsNow.com: STR: Orlando reports strong weekly increases

Overall, the U.S. hotel industry’s occupancy increased 8.4% to 59.9%, ADR was up 3.4% to US$99.38, and RevPAR finished the week up 12.1% to US$59.54.

Note: RevPAR: Revenue per Available Room.
Click on graph for larger image in graph gallery.

This graph shows the seasonal pattern for the hotel occupancy rate.

The occupancy rate really fell off a cliff in the 2nd half of 2008, and then 2009 was the worst year for the occupancy rate since the Great Depression. The occupancy rate started to improve in the Spring of 2010, and was above the 2008 rates later in the year.

The occupancy rate was fairly low in January and February, but appears to be improving recently.

Data Source: Smith Travel Research, Courtesy of HotelNewsNow.com

by Calculated Risk on 3/03/2011 04:47:00 PM

The European financial crisis has been simmering in the background, but will probably become front page news again this month. There are several meetings schedule in March, starting tomorrow in Helsinki, and then a special eurozone debt crisis summit on March 11th.

Also the European Banking Authority has now launched the next round of bank stress tests.

The EBA’s Board of Supervisors agreed to launch the 2011 EU-wide stress testing exercise with National Supervisory Authorities on 4 March 2011. The stress test, which will be conducted on a large number of European banks, involves a series of detailed technical steps and, as a consequence, will take several months to run. It will be run against a baseline and an adverse macro economic scenario in order to assess the solvency of the banks involved in the exercise against hypothetical adverse economic events. The adverse macro-economic scenario, designed by the ECB, will incorporate a significant deviation from the baseline forecast and country-specific shocks on real estate prices, interest rates and sovereigns. This is in line with the EBA’s micro-prudential objective of analysing institution-specific prudential soundness

The EBA will provide the banks with details of the scenarios by the end of this week, after which there will be a period of discussion and feedback. The EBA plans to publish the macro-economic scenarios along with the sample of banks involved, on 18 March 2011. ... the EBA anticipates being able to publish the broad principles of the stress test methodology in April. Following a vigorous peer review, the EBA will publish the final results of the exercise in June.

And I should mention that European Central Bank President Jean-Claude Trichet said today "Strong vigilance is warranted with a view to contain upside risks to price stability." and many view that wording as suggesting a rate hike is coming at the next meeting.

Here is a look at European bond spreads from the Atlanta Fed weekly Financial Highlights released today (graph as of March 2nd):

Click on graph for larger image in new window.

From the Atlanta Fed:

Most peripheral European bond spreads (over German bonds) continue to be elevated, particularly those of Greece, Ireland, and Portugal.

Since the January FOMC meeting, the 10-year Greece-to-German bond spread has widened by 102 basis points (bps), through March 1. Similarly, the spread for Ireland is 37 bps higher; it is 39 bps wider for Portugal but has actually declined somewhat for Spain.

Here are the Ten Year yields for Ireland, Portugal, Spain, Greece, and Belgium (ht Nemo) All moving up some more today ...