May Economic Update


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May Economic Update

  1. 1. Economic Update 05/10/2010
  2. 2. Summary, Videos & GDP 1 st Quarter GDP: 3.2% (Initial Estimate) Source: CNBC, Bureau of Economic Analysis, Bureau of Labor Statistics (BLS), Wall Street Journal Chart 3: Temp Penetration Rate Traditionally, an increasing number of temporary workers is the first indication that the employment market is beginning to recover as employers are reluctant to hire full time employees. Chart 2: Non Farm Pay Roll This metric typically turns positive 3-6 months after the temporary job growth begins. Temp employment has been positive for the past 6 months. Chart 1: Unemployment Rate Unemployment Rate is the last number to decrease (and takes years to move dramatically). Please note: The US needs to increase by ~125,000 jobs per month (on average) to keep the unemployment rate from decreasing (because the population of the United States typically increased by ~1.5 million workers every year due to population growth and immigration). This normal workforce growth has not occurred and has been distorted during the recession as many people have left the workforce. These numbers are not intended to be followed or scrutinized monthly. Example: There are ~154 Million people in the US work force. A margin of error of slightly less than 1% on the survey (a normal margin of error) is equal to ~100,000/month. These metrics are a great indicator of if things are getting better or worse over time. Video & Economic Summary Economic Summary & GDP Employment Situation Projections 2010 GDP Growth Estimate: 2.9% – 3.2% (Up 0.1% - .02% from April’s Forecast) Unemployment Rate: 9.3% in Dec 2010 (unchanged from April ‘s Forecast) GDP was 3.2% in the 1 th quarter on the initial estimate. 48.46% of the growth came from businesses increasing their inventory and consumers increased their spending. Net Exports shifted negative as imports increased. Videos start with 15 sec commercial 48.46% of 1 th Qtr. GDP Growth was a result of businesses increasing inventories Steve Leisman, CNBC & Carl Camden, CEO Kelly Services (May 7, 2010) (4 min 10 sec) Click to Play   2009 2010 Main Components of GDP 1st 2nd 3rd 4th 1st Consumers 0.44% -0.62% 1.96% 1.16% 2.55% (Personal Consumption) *Businesses -8.98% -3.10% 0.54% 4.39% 1.67% (Gross Private Domestic Investment) Net Exports (Exports-Imports) 2.64% 1.65% -0.81% 0.27% -0.61% Government -0.52% 1.33% 0.55% -0.26% -0.37% Total GDP -6.42% -0.74% 2.24% 5.56% 3.24%           *Inventories -2.36% -1.42% 0.69% 3.79% 1.57% (Component of Businesses)
  3. 3. US Employment Situation Number of people employed as a temporary employee divided by total non farm payroll employment Temp Employment Turns Positive Temporary help services added 26,200 jobs in April. Since reaching a low point in September 2009, temporary help services employment has risen by 330,000. Temp employment is a component of Professional and Business Services. Why is this Important? “ Temporary Help Employment is a Leading Indicator for Nonfarm Employment—Staffing job trends lead nonfarm employment by three months when the economy is emerging from a recession and by six months during periods of normal economic growth . ” American Staffing Association Temp Penetration Rate: 1.58% .02% Job Loss: 290,000 Jobs Unemployment Rate: 9.9% .2% Unemployment Rate: Bachelor’s Degree or higher US Census Hiring: 66,000 new Census temp jobs were added in April (a lower number than many economists expected). Additional Details: Total nonfrarm employment for Feb & March was revised positively. February was revised from -14,000 to +39,000, and the change for March was revised from 162,000 to 230,000 for a total of 121,000 additional jobs than previously reported. Payroll Survey Shows: 573,000 Jobs Added Year-to-Date Household Survey Shows: 1,656,000 Jobs Added Year-to Date Source: Bureau of Labor Statistics, American Staffing Association Job Loses Change from Previous Month Transportation & Warehousing -19.500 Job Gains Change from Previous Month Professional & Business Services 80,000 Government 59,000 Leisure & Hospitality 45,000 Manufacturing 44,000 Construction 14,000 Retail Trade 12,400 Financial Activities 3,000 Education & Health Services 35,000 - Education 8,900 - Healthcare 20,100 - Social Assistance 6,300 Dec 09 Jan 2010 Feb 2010 March 2010 April 2010 5.0% 4.9% 5.0% 4.9% 4.9%
  4. 4. Economic Projections & Unemployment Rate Details Why Did the Unemployment Rate Rise? GDP Projections Survey of Economists (Wall Street Journal) Unemployment Rate Projections Survey of Economists (Wall Street Journal) Source: Wall Street Journal Please note: WSJ Projections were released prior to the BLS report Job Gains Speed Up And More Seek Work, Wall Street Journal May 8, 2010 Why Did The Unemployment Rate Rise? “ In April, the civilian labor force rose 805,000 as more people joined the work force. That was the fourth straight monthly increase, amounting to a gain of almost 1.7 million people since the beginning of the year. Of the people added to the labor force in April, according to the household survey, 550,000 found jobs and 255,000 didn’t. So, the rise in the unemployment rate was due to more people feeling that the economy is good enough to restart their job searches. That’s a good sign, even though it means more active competition for job-seekers.” Wall Street Journal, May 7, 2010