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May Economic Update


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May Economic Update

  1. 1. 05/10/2010 Economic Update
  2. 2. Summary, Videos & GDP Video & Economic Summary Videos start with 15 sec commercial 1st Quarter GDP: 3.2% (Initial Estimate) Steve Leisman, CNBC & Carl Camden, CEO Kelly Services (May 7, 2010) Click to Play (4 min 10 sec) Economic Summary & GDP GDP was 3.2% in the 1th 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. Employment Situation 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 2009 2010 employment has been positive for the past 6 months. Main Components of GDP 1st 2nd 3rd 4th 1st Consumers Chart 1: Unemployment Rate (Personal Consumption) 0.44% -0.62% 1.96% 1.16% 2.55% Unemployment Rate is the last number to decrease (and takes years to move dramatically). *Businesses (Gross Private Domestic Investment) -8.98% -3.10% 0.54% 4.39% 1.67% Please note: The US needs to increase by ~125,000 jobs per month (on average) to keep the unemployment rate Net Exports (Exports-Imports) 2.64% 1.65% -0.81% 0.27% -0.61% from decreasing (because the population of the United States typically increased by ~1.5 million Government -0.52% 1.33% 0.55% -0.26% -0.37% workers every year due to population growth and immigration). Total GDP -6.42% -0.74% 2.24% 5.56% 3.24% This normal workforce growth has not occurred and has been distorted during the recession as many *Inventories people have left the workforce. These numbers are not intended to be followed or scrutinized (Component of Businesses) -2.36% -1.42% 0.69% 3.79% 1.57% 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. 48.46% of 1th Qtr. GDP Growth Projections was a result of businesses increasing inventories 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) Source: CNBC, Bureau of Economic Analysis, Bureau of Labor Statistics (BLS), Wall Street Journal
  3. 3. US Employment Situation Temp Penetration Rate: 1.58% .02% Job Loss: 290,000 Jobs Unemployment Rate: 9.9% .2% Number of people employed as a temporary employee Change from Unemployment Rate: Bachelor’s Degree or higher divided by total non farm payroll employment Job Loses Previous Month Transportation & Dec 09 Jan 2010 Feb 2010 March 2010 April 2010 Temp Employment Turns Positive Warehousing -19.500 5.0% 4.9% 5.0% 4.9% 4.9% Temporary help services added 26,200 jobs in April. Change from US Census Hiring: Job Gains Previous Month Since reaching a low point in September 2009, 66,000 new Census temp jobs were added in April (a lower Professional & temporary help services employment has risen by number than many economists expected). Business Services 80,000 330,000. Temp employment is a component of Government 59,000 Professional and Business Services. Additional Details: Total nonfrarm employment for Feb & Leisure & Hospitality 45,000 March was revised positively. February was revised from -14,000 Manufacturing 44,000 to +39,000, and the change for March was revised from 162,000 Why is this Important? Construction 14,000 to 230,000 for a total of 121,000 additional jobs than previously ―Temporary Help Employment is a Leading Retail Trade 12,400 reported. Indicator for Nonfarm Employment—Staffing job Financial Activities 3,000 trends lead nonfarm employment by three months Education & Health Services 35,000 Payroll Survey Shows: 573,000 Jobs Added Year-to-Date when the economy is emerging from a recession and - Education 8,900 Household Survey Shows: 1,656,000 Jobs Added Year-to Date by six months during periods of normal economic - Healthcare 20,100 growth.‖ American Staffing Association - Social Assistance 6,300 Source: Bureau of Labor Statistics, American Staffing Association
  4. 4. Economic Projections & Unemployment Rate Details Unemployment Rate Projections Why Did the Unemployment Rate Rise? Survey of Economists (Wall Street Journal) GDP Projections Survey of Economists (Wall Street Journal) 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 Source: Wall Street Journal Please note: WSJ Projections were released prior to the BLS report