by Calculated Risk on 8/03/2012 04:07:00 PM

Once again rail traffic was "mixed". Building related commodities were up such as lumber and crushed stone, gravel, sand. Lumber was up 9% from July 2011.

From the Association of American Railroads (AAR): AAR Reports Mixed Weekly and July Monthly Rail Traffic

The Association of American Railroads (AAR) today reported U.S. rail carloads originated in July 2012 totaled 1,103,733, down 7,787 carloads or 0.7 percent, compared with July 2011. Intermodal volume in July 2012 was 946,071 trailers and containers, up 50,431 units or up 5.6 percent, compared with July 2011. The July 2012 weekly intermodal average of 236,518 trailers and containers is the highest July average in history.
...
“Carloads of some of the more economically sensitive commodities, such as lumber and wood, steel, and autos, gave us a mixed message in July. While lumber related to home construction remained very positive, other manufactured goods either grew more slowly than they have been or actually fell in July,” said AAR Senior Vice President John T. Gray. “It remains to be seen if this is just a blip or something more serious. More positively, intermodal volume remains on track to see a record year in 2012.”

Click on graph for larger image.

This graph shows U.S. average weekly rail carloads (NSA).

U.S. railroads originated 1,103,733 total carloads in July 2012, down 0.7% (7,787 carloads) from July 2011. It was the sixth straight year-over-year monthly decline, but at 0.7% it was the lowest percentage decline in those six months.

Eight of the 20 commodity categories tracked by the AAR saw carload gains in July 2012 year over year, the lowest such number since May 2011. By contrast, 13 of the 20 categories are up year-to-date in 2012 compared with 2011.

Grains is off 10% year-over-year due to fewer exports.

The second graph is for intermodal traffic (using intermodal or shipping containers):

Graphs reprinted with permission.

Intermodal traffic is now at peak levels.

U.S. intermodal traffic was up 5.6% (50,431 containers and trailers) in July 2012 over July 2011 to 946,071 units, its 32nd consecutive year-over-year monthly increase. Average weekly intermodal volume in July 2012 was 236,518 units, the highest of any July in history

The top months for intermodal are usually in the fall, and it looks like intermodal traffic will be at record levels this year.

This is more evidence of sluggish growth - and of residential investment making a positive contribution.
Earlier on employment:
• July Employment Report: 163,000 Jobs, 8.3% Unemployment Rate
• Employment: Another Fairly Weak Report (more graphs)
• All Employment Graphs

by Calculated Risk on 8/03/2012 12:51:00 PM

Earlier ... the July ISM Non-manufacturing index was at 52.6%, up from 52.1% in June. The employment index decreased in July to 49.3%, down from 52.3% in June. Note: Above 50 indicates expansion, below 50 contraction.

From the Institute for Supply Management: July 2012 Non-Manufacturing ISM Report On Business®

Economic activity in the non-manufacturing sector grew in July for the 31st consecutive month, say the nation's purchasing and supply executives in the latest Non-Manufacturing ISM Report On Business®.

The report was issued today by Anthony Nieves, C.P.M., CFPM, chair of the Institute for Supply Management™ Non-Manufacturing Business Survey Committee. "The NMI registered 52.6 percent in July, 0.5 percentage point higher than the 52.1 percent registered in June. This indicates continued growth this month at a slighter faster rate in the non-manufacturing sector. The Non-Manufacturing Business Activity Index registered 57.2 percent, which is 5.5 percentage points higher than the 51.7 percent reported in June, reflecting growth for the 36th consecutive month. The New Orders Index increased by 1 percentage point to 54.3 percent. The Employment Index decreased by 3 percentage points to 49.3 percent, indicating contraction in employment for the first time since December 2011. The Prices Index increased 6 percentage points to 54.9 percent, indicating higher month-over-month prices when compared to June. According to the NMI, 11 non-manufacturing industries reported growth in July. Respondents' comments are mixed and vary by industry and company."

Click on graph for larger image.

This graph shows the ISM non-manufacturing index (started in January 2008) and the ISM non-manufacturing employment diffusion index.

This was above the consensus forecast of 52.0% and indicates slightly faster expansion in July than in June. The internals were mixed with the employment index weaker, and new orders stronger.

by Calculated Risk on 8/03/2012 10:21:00 AM

The economy has added 1.06 million jobs over the first seven months of the year (1.12 million private sector jobs). At this pace, the economy would add around 1.9 million private sector jobs in 2012; less than the 2.1 million added in 2011. Also, at this pace of payroll job growth, the unemployment rate will probably still be above 8% at the end of the year.

Some numbers: There were 163,000 payroll jobs added in July, with 172,000 private sector jobs added, and 9,000 government jobs lost. The unemployment rate increased slightly to 8.3% (from the household survey), and the participation rate declined to 63.7%. Both are moving in the wrong direction.

U-6, an alternate measure of labor underutilization that includes part time workers and marginally attached workers, increased so 15.0%.

The change in May payroll employment was revised up from +77,000 to +87,000, but June was revised down from +80,000 to +64,000.

The average workweek was unchanged at 34.5 hours, and average hourly earnings increased slightly. "The average workweek for all employees on private nonfarm payrolls was unchanged at 34.5 hours in July. ... In July, average hourly earnings for all employees on private nonfarm payrolls edged up by 2 cents to $23.52. Over the year, average hourly earnings rose by 1.7 percent." This is sluggish earnings growth.

There are a total of 12.8 million Americans unemployed and 5.2 million have been unemployed for more than 6 months.

Even though the number of payroll jobs added was more than expected, the bottom line is this was another fairly weak employment report. Here are a few more graph ...

Employment-Population Ratio, 25 to 54 years old

Click on graph for larger image.

Since the participation rate has declined recently due to cyclical (recession) and demographic (aging population) reasons, an important graph is the employment-population ratio for the key working age group: 25 to 54 years old.

In the earlier period the employment-population ratio for this group was trending up as women joined the labor force. The ratio has been mostly moving sideways since the early '90s, with ups and downs related to the business cycle.

This ratio should probably move back to or above 80% as the economy recovers. So far the ratio has only increased slightly from a low of 74.7% to 75.5% in July (this was down slightly in July.)

Percent Job Losses During Recessions


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

In the earlier post, the graph showed the job losses aligned at the start of the employment recession.

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 8.2 million in July. 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 part time workers increased slightly in July to 8.25 millon.

These workers are included in the alternate measure of labor underutilization (U-6) that increased in July to 15.0%, up from 14.9% in June.

Unemployed over 26 Weeks

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

According to the BLS, there are 5.19 million workers who have been unemployed for more than 26 weeks and still want a job. This was down from 5.37 million in June. This is generally trending down, but very slowly. Long term unemployment remains one of the key labor problems in the US.

State and Local Government

So far in 2012 - through July - state and local government have lost 42,000 jobs (7,000 jobs were added in July). In the first seven months of 2011, state and local governments lost 205,000 payroll jobs - and 230,000 for the year. So the layoffs have slowed.

This graph shows total state and government payroll employment since January 2007. State and local governments lost 129,000 jobs in 2009, 262,000 in 2010, and 230,000 in 2011.

Note: Some of the stimulus spending from the American Recovery and Reinvestment Act probably kept state and local employment from declining faster in 2009.

Of course the Federal government is still losing workers (38,000 over the last 12 months and another 2,000 in July), but it looks like state and local government employment losses might be slowing - but the job losses haven't stopped yet.

Overall this was another fairly weak report.
All Employment Graphs

by Calculated Risk on 8/03/2012 08:30:00 AM

From the BLS:

Total nonfarm payroll employment rose by 163,000 in July, and the unemployment rate was essentially unchanged at 8.3 percent, the U.S. Bureau of Labor Statistics reported today. Employment rose in professional and business services, food services and drinking places, and manufacturing.
...
Both the civilian labor force participation rate, at 63.7 percent, and the employment- population ratio, at 58.4 percent, changed little in July.
...
The change in total nonfarm payroll employment for May was revised from +77,000 to +87,000, and the change for June was revised from +80,000 to +64,000.

Click on graph for larger image.

This was a somewhat better month, and the revisions for the previous two months were mostly offsetting.

This was above expectations of 100,000 payroll jobs added.

The second graph shows the employment population ratio, the participation rate, and the unemployment rate. The unemployment rate increased to 8.3% (red line).

The Labor Force Participation Rate declined slightly to 63.7% in July (blue line). 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 most of the recent decline is due to demographics.

The Employment-Population ratio declined to 58.4% in July (black line).

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

This shows the depth of the recent employment recession - worse than any other post-war recession - and the relatively slow recovery due to the lingering effects of the housing bust and financial crisis.

This was more payroll growth than expected, but still fairly weak. (expected was 100,000). I'll have much more later ...

by Calculated Risk on 8/02/2012 09:29:00 PM

From the Financial Times: Draghi kills hope of instant action

Financial markets recoiled on Thursday after Mario Draghi demanded eurozone governments turn to existing rescue funds before any intervention by the European Central Bank in bond markets to shore up Europe’s monetary union.
Excerpt with Permission

Some analysis from the Joseph Cotterill at Alphaville: Was Draghi really a disaster? and from Tim Duy at EconomistsView: Second Policy Failure of the Week

On Friday:
• At 8:30 AM ET, the Employment Report for July will be released. The consensus is for an increase of 100,000 non-farm payroll jobs in July, up from the 80,000 jobs added in June. The consensus is for the unemployment rate to remain unchanged at 8.2%.

Some thoughts: Employment Situation Preview and from Binyman Appelbaum at Economix: Beware the Jobs Report of July

As ... Floyd Norris explained last month, one possible distortion that has arisen in recent years, thanks to the weakness of the economy, is that “seasonal adjustments make things look better than they are in the winter, when fewer workers are being let go than the government expects, and worse in the spring and summer, when the workers who were not let go cannot be rehired.”

• 10:00 AM, the ISM non-Manufacturing Index for July will be released. The consensus is for a decrease to 52.0 from 52.1 in June.

For the economic contest in August: