by Calculated Risk on 6/02/2011 05:44:00 PM

From the Financial Times: US job relocation activity picks up sharply

Companies that specialise in corporate relocations said they were seeing double-digit increases in their businesses compared with the same period a year ago. They added that corporate relocations ... are far outpacing more modest gains in other types of moves such as those by members of the military or government employees.
excerpt with permission

This may be increasing, but it is from a very low level.

Challenger, Gray & Christmas tracks manager mobility each quarter. In 2010, there were a record low percent of job seekers who relocated for a new position (percent of those who found jobs). The percentage picked up a little in Q1 2011, but it is an easy comparison to last year.

Click on graph for larger image in new window.

Here is the quarterly data from Challenger, Gray through Q1 2011. Mobility has been trending down for some time, but collapsed in 2010.

It appears the lower mobility was related to the housing market. The Financial Times notes that the first question many companies ask when interviewing out-of-area potential hires is: "What do you owe on your house?"

It is tough to move when you can't sell your home. Sometimes the new employer will pick up the short fall for key executives and managers, but it is probably too expensive for potential hires with serious negative equity.

by Calculated Risk on 6/02/2011 02:22:00 PM

There are no specifics yet ...

From Reuters: EU agrees in principle on new Greek plan-source

Senior euro zone officials have agreed in principle on a new three-year adjustment programme for Greece to run until mid-2014 ... involve some participation of private sector investors ... involve detailed commitments by Greece on the governance of a new national wealth agency and the timing of specific privatisations, but it would stop short of intrusive international supervision ...

There had been some discussion of "adult supervision" or what some were calling the loss of Greek sovereignty - apparently that isn't included. It isn't clear what the "participation of private sector investors" means, but the article suggests it will not trigger a credit event.

by Calculated Risk on 6/02/2011 11:30:00 AM

Tomorrow the BLS will release the May Employment Situation Summary at 8:30 AM ET. As I noted in the weekly schedule, the consensus forecast for payroll jobs seems too high; Bloomberg is showing the consensus is for an increase of 190,000 payroll jobs in May, and for the unemployment rate to decline to 8.9%.

Of course many analysts have reduced their forecasts this week based on the ISM manufacturing survey and the ADP employment report. As an example, in a note last night, Goldman chief economist Jan Hatzius wrote:

"We have lowered our forecast for nonfarm payroll growth in May to +100,000 from +150,000 previously. This shift is a direct response to the downbeat data so far this week, including big disappointments in the ADP report on private-sector employment, the ISM manufacturing survey, and the Conference Board's consumer confidence index. Our forecasts for the unemployment rate and average hourly earnings remain unchanged at 8.9% and +0.2%, respectively."

Here is a summary of recent data:

• The ADP employment report (private sector only) showed an increase of only 38,000 payroll jobs in May. This was significant below the 194 thousand per month average for the first four months of the year.

• Initial weekly unemployment claims have averaged 425,500 per week in May, about the same as in December 2010 and January 2011. The BLS reported an average of just over 100 thousand payroll jobs added during those two months (although there were some weather issues in January).

• The ISM manufacturing index slowed sharply in May, however the Institute for Supply Management noted: "Manufacturing employment continues to show good momentum for the year, as the Employment Index registered 58.2 percent, which is 4.5 percentage points lower than the 62.7 percent reported in April." This suggests manufacturers were still expanding their payrolls in May (the regional manufacturing surveys also showed payroll expansion).

A few examples of regional reports: The Chicago PMI reported: "Breadth of EMPLOYMENT expansion softened but remained strong." The employment index decreased to a still strong 60.8 from 63.7 (above 50 is expansion). And the Philly Fed reported: "Firms’ responses continue to indicate overall improvement in the labor market despite weaker activity ..." and the Empire State survey showed "The index for number of employees inched up to 24.7, indicating that employment levels expanded over the month, and the average workweek index rose thirteen points to 23.7, a multi-year high." (above 0 is expansion).

So even as activity slowed, manufacturers continued to hire. This suggests that many manufacturers believe the slowdown is temporary.

• The final May Reuters / University of Michigan consumer sentiment index increased to 74.3 from the preliminary reading of 72.4, and from 69.8 in April. This is frequently coincident with improvements in the labor market - but also strongly related to gasoline prices (Gasoline was probably the reason for the slight improvement in May).

• And on the unemployment rate from Gallup: U.S. Unemployment Stagnant in May

Unemployment, as measured by Gallup without seasonal adjustment, stood at 9.2% at the end of May -- unchanged from mid-May and down slightly from 9.4% at the end of April. It is also slightly lower than it was at the same time last year (9.5%).

NOTE: The Gallup poll results are Not Seasonally Adjusted (NSA), so use with caution. This suggests the unemployment rate will be about the same or decline slightly in May.

• Even if the payroll report shows improvement, the employment situation remains grim. There are 6.955 million fewer payroll jobs now than before the recession started in 2007 with 13.7 million Americans currently unemployed. Another 8.6 million are working part time for economic reasons, and about 4 million more workers have left the labor force. And 5.84 million have been unemployed for six months or more. Numbers to remember.

• Oh, one thing is for sure, some commentators will incorrectly use the BLS birth/death model!

Obviously the economy slowed in May, and the employment report will most likely reflect this slowdown. I expect something close to 100 thousand payroll jobs.

by Calculated Risk on 6/02/2011 08:40:00 AM

The DOL reports on weekly unemployment insurance claims:

In the week ending May 28, the advance figure for seasonally adjusted initial claims was 422,000, a decrease of 6,000 from the previous week's revised figure of 428,000. The 4-week moving average was 425,500, a decrease of 14,000 from the previous week's revised average of 439,500.

The following graph shows the 4-week moving average of weekly claims for the last 40 years.

Click on graph for larger image in graph gallery.

The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims decreased this week to 425,500.

This is the eight straight week with initial claims above 400,000, and the 4-week average is at about the same the level as in January when there were fewer payroll jobs being added.

by Calculated Risk on 6/01/2011 10:29:00 PM

Earlier today the economic data was weak:
• ADP: Private Employment increased by 38,000 in May
• ISM Manufacturing index declines to 53.5 in May
• U.S. Light Vehicle Sales 11.8 million SAAR in May

The restaurant index is one of several industry specific indexes I track each month. The following report is for April.

From the National Restaurant Association: Restaurant Industry Outlook Remains Positive as Restaurant Performance Index Stood Above 100 for Fifth Consecutive Month

The National Restaurant Association’s Restaurant Performance Index (RPI) – a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry – stood at 100.9 in April, essentially unchanged from a level of 101.0 in March. In addition, April represented the fifth consecutive month in which the RPI stood above 100, which signifies expansion in the index of key industry indicators.
...
Restaurant operators continued to report net positive same-store sales results in April. ... Restaurant operators also reported a net increase in customer traffic in April, although levels were somewhat softer than the March results.
...
Capital spending activity among restaurant operators trended upward in recent months. Forty-eight percent of operators said they made a capital expenditure for equipment, expansion or remodeling during the last three months, the highest level in nearly three years.
...
For the seventh consecutive month, restaurant operators reported a positive outlook for staffing levels in the coming months.

Click on graph for larger image in graph gallery.

The index decreased to 100.9 in April (above 100 indicates expansion).

Unfortunately the data for this index only goes back to 2002.

This report was for April, and the economy clearly slowed in May (so the report next month will be interesting). This is a minor report (really not even "D-List" data), but I'd expect discretionary spending to slow sharply if consumers become really worried.