For the third straight month, the US unemployment rate remained steady at 9.1%; the broader underutilization rate increased to 16.5% (from 16.2%).
• A net +103k jobs were created in September, surpassing economists' consensus estimates of a 60k increase; July and August payrolls were revised upward by ~100k jobs (Note: While any jobs increase is good news, this figure reflects the 45k striking Verizon employees who were not accounted for in August).
• Approximately 14.0M persons remain unemployed; long-term unemployed, those who have been out of work for 6+ months, remained flat at 6.2M (44.2% of all unemployed).
• The labor-force participation rate, the share of the US population in the jobs market, increased slightly to 64.2% (from 64.0%).
• Average hourly earnings increased to $23.12 and 1.9% on an annual basis.
Gains/losses…the usual suspects
• Professional and business services (+48k; temp. help: +19k), health care (+44k) and retail (+14k) trended positively; one welcomed surprise: construction (+26k).
• Government (-34k) and manufacturing (-13k) continued their “September swoons”. (Note: The US Postal Service’s financial difficulties, along with state/local government austerity, will continue to weigh on the government sector).
What’s in store? Key watch items…
On the bearish side:
• Sources of US job growth. If we zoom out and look at where job growth has been primarily coming from over the past year – health care and temporary help - this does not inspire confidence in a meaningful economic recovery.
• Manufacturing. The global manufacturing sector, which previously powered the global economy out of recession, continues to decelerate. The negative trend in new orders means that companies are working off their backlogs from earlier in the year and are struggling to attract new business. The net effect: a (potential) vicious cycle where decreasing demand in advanced economies (US, EU) affects growth in developing economies (Asia) and vice versa.
• Global GDP. The International Monetary Fund (IMF) predicts global growth of 4% for the next two years with continued growth in the “BIC” countries offsetting the US and EU woes. However, growth could be further impaired if countries fail to address their debt crises and rising inflationary pressures.
On the bullish side:
• Credit Card Debt. As a potential sign of improving consumer demand and sentiment, a recent study by Cardhub.com showed that consumers racked up $18.4B in credit card debt in Q211. That’s 66% higher than a year ago and more than four times greater than two years ago.
• Small Business Hiring. According to a September survey of 7500 US businesses conducted by Pepperdine University and Dun and Bradstreet, 41% of small firms said they plan on expanding their payrolls within the next six months (vs. 38% who said they won’t and 21% who remain unsure). Among the areas of demand – sales and marketing. Given that small businesses employ about half of the private sector, this may provide a much needed catalyst.
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