The latest employment report, released Friday by the U.S. Department of Labor, disappointed on many fronts. However, if we extrapolate current short-term trends -- particularly with the nonfarm payroll data -- there are some potential bright spots.I'll discuss areas of concern first and then the reasons for optimism.
Many Numbers Remain BadThere's a long list of bad numbers in Friday's report:
- The unemployment rate rose from 9.8% to 10.2%.
- The loss of 190,000 nonfarm payroll jobs was larger than consensus estimates of a loss of 175,000.
- The total number of job losses accelerated over the past two months.
- The civilian labor force continued to shrink (by 31,000 in October and 903,000 in the past year).
- Average weekly hours worked remained at the historic low of 33.0.
- The number of people working part-time involuntarily increased again, by 105,000 in October. It's up 637,000 since July, 2.5 million in the past year, and 5 million in the past two years).
Reasons for HopeThe first glimmer comes from the 12-month change in nonfarm payrolls, shown in the first graph. The rate of change has turned up, a positive second-derivative effect. It is also positive that the monthly curve has crossed above the four-month moving average.
- The data line is below the four-month moving average and moving downward nearly in parallel.
- Both the data line and the moving average are moving downward nearly in parallel with the trend lines.
- The quadratic trend line is clearly concave downward with respect to the linear trend line, indicating a possible acceleration downward.