Disclaimer. After nearly 40 years managing money for some of the largest life offices and investment managers in the world, I think I have something to offer. But I can't by law give you advice, and I do make mistakes. Remember: the unexpected sometimes happens. Oddly enough, the expected does too, but all too often it takes longer than you thought it would, or on the other hand happens more quickly than you expected. The Goddess of Markets punishes (eventually) greed, folly, laziness and arrogance. No matter how many years you've served Her. Take care. Be humble. And don't blame me.

BTW, clicking on most charts will produce the original-sized, i.e., bigger version.

Saturday, July 6, 2013

June Labor Market

"Or" instead or "our" because it's the US labour market.

I had an estimated increase in payrolls of 220,000 in my calculations.  The increase during the month was less than that, but revisions to the last couple of months pushed up total payrolls in June to more than I had guessed.  When previous numbers are revised up, it tends to be a sign that economic growth is strong.

The chart below shows the average for the ISM and the PMI, both national measures of manufacturing strength.  The ISM used to called the NAPM.   The big question over the last few months has been whether the "fiscal cliff" (a simultaneous rise in Federal taxes, or at least  a return to pre-crisis levels) and a cut in spending would plunge the US back into recession.  Yes, growth did slow a little -- see the slide in the combined ISM/PMI  indicator -- but both it and the three-month change in payrolls have bottomed.

Other labour market indicators retreated over the last couple of months and have rallied:  overtime hours in manufacturing, a very sensitive cyclical indicator, fell and recovered somewhat in June; and even government employment appears to be flattening out, which given the "fiscal cliff" at Federal level is remarkable and implies states and municipalities are hiring again.