Get ready for the second half of the year.....

[Dave_In_Norfolk]

A long, long term trend continues:

 

 

As unlikely as it would seem against this backdrop, manufacturers who want to expand find that hiring is not always easy. During the recession, domestic manufacturers appear to have accelerated the long-term move toward greater automation, laying off more of their lowest-skilled workers and replacing them with cheaper labor abroad.

 

Now they are looking to hire people who can operate sophisticated computerized machinery, follow complex blueprints and demonstrate higher math proficiency than was previously required of the typical assembly line worker.

 

Makers of innovative products like advanced medical devices and wind turbines are among those growing quickly and looking to hire, and they too need higher skills.

 

“That’s where you’re seeing the pain point,” said Baiju R. Shah, chief executive of BioEnterprise, a nonprofit group in Cleveland trying to turn the region into a center for medical innovation. “The people that are out of work just don’t match the types of jobs that are here, open and growing.”

 

The increasing emphasis on more advanced skills raises policy questions about how to help low-skilled job seekers who are being turned away at the factory door and increasingly becoming the long-term unemployed. This week, the Senate reconsidered but declined to extend unemployment benefits, after earlier extensions raised the maximum to 99 weeks.

 

This is why communism in some form is inevitable. Someday, all work will be automated. These unskilled jobs are never coming back, so where are the jobs going to come from so these people can work?

 

http://www.nytimes.com/2010/07/02/business...l?th&emc=th

[Nanker]

A long, long term trend continues:

 

 

 

 

This is why communism in some form is inevitable. Someday, all work will be automated. These unskilled jobs are never coming back, so where are the jobs going to come from so these people can work?

 

http://www.nytimes.com/2010/07/02/business...l?th&emc=th

 

Sure. And you'll be

.

[Adam]

Sure. And you'll be

.

a real pizza plant

[Magox]

A long, long term trend continues:

 

 

 

 

This is why communism in some form is inevitable. Someday, all work will be automated. These unskilled jobs are never coming back, so where are the jobs going to come from so these people can work?

 

http://www.nytimes.com/2010/07/02/business...l?th&emc=th

Aside from the communism comment, this is an interesting point. I would definitely believe that as techology advances the need for manual labor will be in less demand. However, I don't see this as something that will take away a meaningfull chunk of the labor force any time soon, but as you pointed, a long, long trend development.

 

I would imagine Health Care would be an area of growth for the forseeable future.

 

Anyhoo, on to todays numbers:

 

Factory orders work weak, an area that had been showing strength over the last couple quarters.

 

U.S. stocks fell, with the Dow Jones Industrial Average extending its longest slide since the financial crisis of 2008, and commodities slumped as data on jobs and factory orders added to concern the economic rebound is slowing. The 10-year Treasury yield held below 3 percent.

 

Today’s reports showing a decrease in jobs and a 1.4 percent drop in factory orders extended a slide that threatens to drag the S&P 500 into a bear market and follow data yesterday showing a slowdown in manufacturing growth and a bigger-than- estimated decrease in pending home sales. The latest economic releases are causing investors to question whether analysts were too optimistic in predicting 32 percent profit growth for S&P 500 companies this year.

 

Todays jobs report was more bearish than expected. Economists were expecting over 110,000 private sector hirings and the numbers showed 83,000. Also, important note, at first glance, the unemployment rate dropping to 9.5% looks positive, but when you look into the details, it's much worse than expected. As some of you know, that number is comprised of people that are ACTIVELY looking for jobs, the REAL unemployment rate is somewhere hovering above 16%. In this latest report there were 652,000 reported people to have dropped out of the labor force. Not good. Basically this means that people are beginning to become pesimistic again about finding jobs.

 

In a normal recovery, as the labor market returns, people become more optimistic about job prospects and then they return to the labor force. It's normal to see in a good recovery, in the initial phases, the unemployment rate to rise as jobs are returning, due to the simple fact of what I just mentioned which is people returning to the labor force. The data that has been coming out recently shows a serious stall in momentum. So don't let anyone fool you with the 9.5% as being something positive, it's actually quite the opposite.

 

But the decline wasn't particularly good news because it reflected 652,000 people dropping out of the labor force. Some of this was due to the census workers, as many are retirees and are not expected to look for more work. But the sizable drop also reflected some renewed gloom among the ranks of the unemployed, economists said.

 

http://www.marketwatch.com/story/modest-pr...june-2010-07-02

 

Employment fell in June for the first time this year after a decrease in federal census workers and a smaller-than-forecast gain in private hiring. Payrolls fell by 125,000 as the government cut 225,000 temporary workers, the Labor Department said. Economists projected a decline of 130,000 payrolls, according to the median forecast in a Bloomberg News survey. Employment at companies rose 83,000, less than the 110,000 estimate. The jobless rate fell to 9.5 percent from 9.7 percent as the labor force shrank.

 

This is a very good website for full details of every months jobs report

 

http://www.bls.gov/news.release/empsit.nr0.htm

 

In June, the average workweek for all employees on private nonfarm pay-

rolls decreased by 0.1 hour to 34.1 hours. The manufacturing workweek

for all employees decreased by 0.5 hour to 40.0 hours; this followed an

increase of 0.4 hour in May. The average workweek for production and

nonsupervisory employees on private nonfarm payrolls was unchanged at

33.4 hours in June. (See tables B-2 and B-7.)

 

Average hourly earnings of all employees in the private nonfarm sector

decreased by 2 cents, or 0.1 percent, to $22.53 in June. Over the past

12 months, average hourly earnings have increased by 1.7 percent. In

June, average hourly earnings of private-sector production and non-

supervisory employees were unchanged at $19.00. (See tables B-3 and

B-8.)

 

This is also important to note, average workweek and earnings for employees dropped, this is a reversal of what we had seen. Meaning that people in this latest job report worked less hours and made less per hour of work.

[Rob's House]

A long, long term trend continues:

 

 

 

 

This is why communism in some form is inevitable. Someday, all work will be automated. These unskilled jobs are never coming back, so where are the jobs going to come from so these people can work?

 

http://www.nytimes.com/2010/07/02/business...l?th&emc=th

 

There is a fundamental flaw in this logic and it goes back to the dawn of the industrial revolution. Marx wrote of this. When I was a kid and computers were taking over functions that people had done by hand for generations my mom told me about how these jobs were being lost without jobs to replace them. Amazingly though, unemployment has stayed relatively steady over the decades while the standard of living has soared. It makes logical sense to worry about machines taking the jobs, but it doesn't account for the adaptability of free society.

[IDBillzFan]

This is also important to note, average workweek and earnings for employees dropped, this is a reversal of what we had seen. Meaning that people in this latest job report worked less hours and made less per hour of work.

I got a sense of this at a project we've been working on for the City of LA. Just learned they have employees assigned a "furlough day" each week. City can't afford to keep them all five days, so they drop one day per various employee to save some cash. Which is good because it gives them all time to worry about important things...like Arizona's SB1070.

[Dave_In_Norfolk]

There is a fundamental flaw in this logic and it goes back to the dawn of the industrial revolution. Marx wrote of this. When I was a kid and computers were taking over functions that people had done by hand for generations my mom told me about how these jobs were being lost without jobs to replace them. Amazingly though, unemployment has stayed relatively steady over the decades while the standard of living has soared. It makes logical sense to worry about machines taking the jobs, but it doesn't account for the adaptability of free society.

But where are people working now? I believe--someone can check?--that something like 51% of all people now work for the government or are dependent on government contracts, etc. for employment. I think I heard that 11% of all workers in the country work for local governments. So it seems to me that we are moving away from private employment to more of government providing jobs system. It's the "slow-calism" process that the left so bemoanedand and the right was screaming about, but it is happening for better or for worse. That's the adaptability you were talking about happening.

 

And yes, our standard of living has gone up while this was going on. Technology has really provided more with a lot less back breaking labor.

[Magox]

More of an overview:

 

http://www.bloomberg.com/news/2010-07-03/e...c-recovery.html

 

The U.S. recovery is poised to slow in the second half of 2010 after smaller-than-forecast growth in private payrolls for June capped a month of data indicating weakness in industries from housing to manufacturing.

 

The lack of jobs will curtail consumer spending, which accounts for about 70 percent of the world’s largest economy, and restrain sales at retailers including Barnes & Noble Inc. The rebound from the worst recession since the 1930s faces risks from the European debt crisis and slower growth in China at the same time that fiscal stimulus measures fade.

 

“Consumer spending will continue to be quite modest,” said Nariman Behravesh, chief economist at IHS in Lexington, Massachusetts. “We are still paying the price for this big financial crisis we’ve been through. Credit is still tight and housing is suffering.”

 

The U.S. faces headwinds from abroad as a slowdown in China and Europe threaten demand for American exports. Goldman Sachs Group Inc. this week cut its forecast for 2010 growth in China to 10.1 percent from 11.4 percent as government restrictions on lending and real estate slow expansion in the world’s fastest- growing major economy.

 

Some economists, such as Jeffrey Frankel, a member of the National Bureau of Economic Research’s panel that dates U.S. business cycles, say recent data raise the risk of dipping back into a recession.

 

“You cannot rule out a double dip, in light of Europe’s problems,” said Frankel, who is also a Harvard University professor. “The biggest cloud on the horizon globally is the spillover of sovereign debt concerns from Greece. I think the next couple months of indicators will be more telling than the last couple months.”

 

Manufacturing, which accounts for about 11 percent of the economy, helped lead the U.S. out of recession during the second half of last year. Those gains may slacken as the industry cools. A report this week from the Institute for Supply Management showed manufacturing expanded in June at the slowest pace this year as orders and exports cooled.

 

“Everything we have seen in the last several weeks, plus the continued contraction in total bank credit and weak money supply growth, all suggest the economy is losing altitude,” said Paul Kasriel, chief economist at the Northern Trust Corp. in Chicago. “It is not that it will hit the deck; it is adjusting to an even slower rate of growth in the second half of the year.”

 

The average work week for all workers declined to 34.1 hours in June from 34.2 hours the prior month, yesterday’s report showed. Average hourly earnings fell 2 cents to $22.53.

 

“The risk of a double dip is still uncomfortably high, with little left in our arsenal of fiscal and monetary stimulus to fight it,” said Diane Swonk, chief economist of Chicago- based Mesirow Financial Holdings Inc. “It is a bit like being stuck in a traffic jam. We are moving forward, but at such a slow pace it is causing more frustration and tension than sense of progress.”

 

But no worries

“Make no mistake, we are headed in the right direction,” President Barack Obama said yesterday after the employment report.

[Magox]

Another indicator heading down:

Borrowing by small U.S. businesses in May dropped to its lowest level in seven months, data released by PayNet Inc. on Thursday shows, a sign that the nascent recovery may already be faltering.

 

The Thomson Reuters/PayNet Small Business Lending Index, which measures the overall volume of financing to U.S. small businesses, sank about 5 percent from the prior month on a seasonally adjusted basis, hitting its lowest reading since October. It was the fourth-lowest level on record.

But impending regulatory overhauls in the U.S. healthcare and finance industries are making it difficult for small businesses to gauge what their costs will be in the future, and are holding them back from spending now, Phelan said. Investment in plants and equipment at small businesses has decreased for most of this year, the index shows.

"Smaller companies may not have the resources to last in stalled economic times," Phelan said. "I'd be really cautious that a time like this couldn't force us into a double dip if this continues."

[/dev/null]

Magox = TSW's very own Dr Doom

[Magox]

Magox = TSW's very own Dr Doom

 

 

And the way I see it, it will probably stay that way for quite some time.

[....lybob]

There is a fundamental flaw in this logic and it goes back to the dawn of the industrial revolution. Marx wrote of this. When I was a kid and computers were taking over functions that people had done by hand for generations my mom told me about how these jobs were being lost without jobs to replace them. Amazingly though, unemployment has stayed relatively steady over the decades while the standard of living has soared. It makes logical sense to worry about machines taking the jobs, but it doesn't account for the adaptability of free society.

 

True in the long run but there can be huge dislocations in the short run- this happen to blacks who migrated north for jobs- had family supporting factory jobs and other manual labor jobs but when automation reduced the need for grunt labor they were in a bind because they generally had less than an 8th grade education- some of the great unintended negative social consequences of Welfare started at this time because it's support of single mothers over families- leading to the abandonment of families by unemployed fathers.

[/dev/null]

 

 

And the way I see it, it will probably stay that way for quite some time.

 

This gentleman shares a similarly rosy outlook...

http://www.cnbc.com/id/38088826

[Magox]

This gentleman shares a similarly rosy outlook...

http://www.cnbc.com/id/38088826

Actually, more like this gentleman.

[Magox]

ISM Non-Manufacturing numbers came out today, which covers about 90% of the economy :

 

http://www.bloomberg.com/news/2010-07-06/s...ls-to-53-8.html

 

Service industries in the U.S. expanded in June at a slower pace than forecast, indicating the economy was beginning to cool entering the second half.

 

“The economy has entered a soft patch,” said Richard DeKaser, chief economist at Woodley Park Research in Washington, whose forecast of 53.9 was the closest to today’s reading among economists in the Bloomberg survey. “Households are continuing to soldier on, albeit without much vigor.”

 

The figures on services follow reports last week that showed a slowdown in manufacturing and weakness in housing, at the same time Europe grapples with a debt crisis and China tries to slow its economy.

 

“It appears the consumer continues to face economic challenges, and the pressures of the macroeconomic environment still persist,” Leonard Feinstein, the company’s co-chairman, said on a conference call on June 23.

 

Concerns about unemployment and reluctance to make large purchases were also reflected last week in lower-than- anticipated auto sales in June for General Motors Co. and Ford Motor Co., the two largest U.S. automakers.

 

The ISM services survey covers industries that range from utilities and retailing to health care, housing and finance.

 

Housing, which helped trigger the recession, is showing signs of renewed weakness following the end of a government tax credit of as much as $8,000. The absence of faster job growth and rising foreclosures are depressing property prices.

 

Economic data in recent weeks and Europe’s sovereign debt crisis underscore why Federal Reserve policy makers renewed a pledge last month to keep interest rates near a record low. Central bankers said the recovery is “likely to be moderate for a time,” according to their statement. Consumer spending still “remains constrained” by joblessness and “tight credit,” they said.

 

Services have been lagging behind manufacturing, which led the economic recovery that began in the middle of 2009. The ISM reported on July 1 that factories expanded in June at the slowest pace this year as orders and exports cooled, adding to concern financial-market turmoil sparked by Europe’s debt problems will hurt global growth.

 

Paul Krugman seems to believe that we will be entering into a third depression. I don't share his belief, but my guess is that we will grow awfully slow over the next 12 months and most likely beyond.

[Magox]

A few points of data today, more positive than negative:

 

U.S. stocks rose, with the Standard & Poor’s 500 Index posting its first three-day rally since April, as a drop in jobless claims and higher-than-forecast sales at some retailers bolstered confidence in the economy.

 

“It’s very encouraging,” said Stanley Nabi, New York- based vice chairman of Silvercrest Asset Management Group, which manages $9 billion. “The combination of better-than-expected jobless claims and good numbers from some of the largest retailers removed some of the gloom from the market. It was also positive to see the IMF raising its estimates. I think we’re going to have very strong second-quarter earnings. That should support rising stock prices.”

 

Economists had forecast jobless-benefit applications would fall to 460,000 from an initially reported 472,000 for the prior week, according to the median of 36 projections in a Bloomberg survey. The number of people receiving unemployment insurance dropped to the lowest point since 2008, while those getting emergency benefits also declined after Congress failed to pass legislation extending the assistance.

 

The Jobless claims numbers have been in that 440,000-475,000 range for some time now, which is consistent with about a 100,000 jobs created a month that we have been seeing. In order for the unemployment rate to drop (without people dropping from the labor market), you need to see about 125,000 jobs created a month.

 

Retail sales bucked some of the consumer confidence indicators.

 

The International Monetary Fund raised its forecast for global growth this year, reflecting a stronger-than-expected first half, while warning that financial- market turmoil has increased the risks to the recovery.

 

The world economy will expand 4.6 percent in 2010, the biggest gain since 2007, compared with an April projection of 4.2 percent, the Washington-based fund said in revisions yesterday to its World Economic Outlook. Growth next year is projected to be 4.3 percent, unchanged from the April forecast.

 

Canada and the U.S. are leading advanced economies out of the worst recession since World War II, trailed by euro-area countries that need additional measures to boost confidence in their banks, the fund said. Faster expansions in Brazil, China and India are helping to protect the global recovery as a sovereign-debt crisis weighs on Europe, the IMF said.

 

‘Cloud’ Over Outlook

 

“Recent turbulence in financial markets -- reflecting a drop in confidence about fiscal sustainability, policy responses, and future growth prospects -- has cast a cloud over the outlook,” the IMF report said.

 

Fiscal woes in advanced economies may curtail the flow of capital to emerging markets, Olivier Blanchard, the IMF’s chief economist, said at a press briefing today in Hong Kong. Blanchard said the reversal will prove “temporary” in the aftermath of the European crisis, with a resumption of flows over time.

 

My projections put the Euro zone growth next year at around 0.

 

The growth forecast for emerging markets was raised to 6.8 percent, from 6.3 percent in April, the IMF said. The fastest growth rate will be China’s 10.5 percent, followed by India’s 9.4 percent and Brazil’s 7.1 percent, the fund said. Growth forecasts for 2010 in all three of those countries and Russia -- the four known as the BRIC nations -- were increased.

 

This is where the promising growth is coming from. Expect this trend to continue for quite some time. Which is why free trade agreements with the growing countries makes a lot of sense, specially if we want our manufacturing base to grow.

[Magox]

Greece had their first auctions since the crisis for their 6 month TBills and it went ok. So this temporarily will reduce anxiety over the Sovereign Debt Issue.

 

Portugal was downgraded two notches by Moody's, but that was to be expected, so really nothing surprising here.

 

Alcoa beat estimates, which is probably the main reason why the markets are up today, which in my view is more of a sign of Emerging market strength.

 

The trade deficit in the U.S. widened to the highest level since November 2008 to $42.3 Billion. That's a mixed bag, obviously the larger the trade deficit, the weaker our position becomes, but it's also a sign of some domestic economic activity. Just shows you that old habits die hard.

 

US NFIB Small Business Confidence Drops To 88 From 92.2, On Expectations Of 91, to a Three Month Low. Small Business owners are very pessimistic.

[Magox]

What to expect in the second half of the year:

 

 

4) Consumer confidence numbers havn't yet reflected the Stock markets plunge. Those numbers will come off some.

Consumer confidence at an 11 month low.

 

Consumer sentiment weakened in early July to its lowest in 11 months on a resurgence in fears about the economy, a year since the recovery began, a private survey released Friday showed.

 

The reversal in consumer sentiment was dramatic after it reached its strongest level in nearly 2-1/2 years last month on hopes of better job and credit conditions, according to Thomson Reuters/University of Michigan's Surveys of Consumers.

 

The survey's preliminary July reading on the overall index on consumer sentiment plummeted to 66.5 from 76.0 in June.

 

The figure was below the median forecast of 74.5 among economists polled by Reuters.

 

"Income and job prospects were extraordinarily weak and those bleak prospects have made consumers much more cautious spenders," Richard Curtin, director of the surveys, said in a statement.

 

This steep pullback in sentiment is ominous for the U.S. economy, which is already showing signs of slowing.

 

Consumer spending accounts for some 70 percent of the U.S. economy. The latest survey showed consumers' intention to buy durable items such as cars fell to its lowest in nine months.

 

"Moreover, consumers reported renewed weakness in the economy and were more likely to anticipate additional problems in the year ahead," Curtin said.

[Magox]

If the number doesn't get below 465,000 over the next two weeks, well......

 

 

http://noir.bloomberg.com/apps/news?pid=20...plZ7s&pos=1

 

More Americans unexpectedly filed applications for unemployment insurance last week, signaling firings stepped up as the economy slowed.

 

Initial jobless claims rose by 2,000 to 484,000 in the week ended Aug. 7, the highest level since mid February, Labor Department figures showed today in Washington. The number of people receiving unemployment benefits dropped, while those getting supplemental benefits surged by 1.34 million reflecting the government’s extension of eligibility.

 

Companies may be losing confidence in the recovery and are hesitant to hire, raising the risk of further erosion in consumer spending, the biggest part of the economy. Federal Reserve policy makers this week said growth “is likely to be more modest” than they previously projected, prompting central bankers to take additional steps to spur a rebound.

 

“The improvement in the labor market is stalling,” Ryan Sweet, a senior economist at Moody’s Economy.com in West Chester, Pennsylvania, said before the report. “The uncertainty in the outlook is going to keep businesses reluctant to hire.”

 

This is the best forward pointing indicator regarding job growth... Below 425,000 signals an expansion. There may be some seasonal factors that are playing in, so we'll just have to see over the next couple of weeks.

 

even though:

 

There were no special factors influencing last week’s data, a Labor Department spokesman told reporters as the figures were being released.

 

The four-week moving average of claims climbed to 473,500 from 459,250, today’s report showed.

 

The weekly numbers can be pretty volatile, so looking at the four-week moving average is a better gauge, and this latest figure is an atrocious number, and cause for some serious concern.

[John Adams]

And from July 17 to August 12?

 

Come on Dwight: Fair and balanced reporting.