Thursday, November 12, 2009

Employment Galluping Nowhere Good Yet

In 2003, every month CNBC commentators would anxiously await the monthly unemployment numbers, as the jobless recovery moved along. The anxiety was focused primarily on the "establishment" numbers, a survey of numerous generally large to midsize employers (establishments, in other words), which performed as usual in an economic expansion and lagged the clearer jobs growth seen in the telephonically-performed survey of households.

This cycle, matters are different, assuming that an economic expansion has indeed begun. Over 1.1 million jobs are estimated to have been lost in September and October alone, more than double the 2-month total establishment job losses.

People watch initial unemployment insurance claims, which are dropping slowly and are clearly valuable, but those claims do not apply for people who were not covered by unemployment insurance to begin with. Such people include the young, housewives looking for a job either to supplement a husband's income or because of job loss by said husband, older people who suddenly don't have the assets or interest income they counted on, and those in the country illegally or otherwise working for cash.

There is a simple, free way to keep a finger on the employment pulse.

Gallup publishes the results of almost real-time polling data for free at
(Registration may be required.) It's software does not let me link to a graph, however, so I shall describe the survey, which polls people daily. They report whether to their knowledge their employer is increasing, decreasing or not changing the workforce number. On March 9-11 (three-day rolling average), those numbers were, in %:

Hiring 39
Letting go 17
No change 38.

Other dates throughout late winter and spring showed similar numbers. Yet the recession was already on.
It wasn't till almost a year ago that the percent "letting go" equaled the percent hiring.

Today, the rolling average reported by Gallup was 24% letting go, 22% hiring. The unemployment rate was rising rapidly last summer with much better numbers.

Bottom line: the household survey is likely correct. Larger companies, with more staying power, are keeping their profits up and are gradually moving toward a hiring mode. Smaller companies are struggling more.
They are looking at higher governmental fees and taxes and some are not hiring because of the health reform effort in Congress.

This is not a time to invest in any companies than those of very high quality; and of course regular readers know that I believe that we are probably not finished with the secular bear market that began either in 1997-8 or, more conventionally, in 2000.

Copyright (C) Long Lake LLC 2009

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