Economic Update (June 2011)

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  1. 1. US Employment Situation Number of people employed as a temporary employee divided by total non farm payroll employment June 2009Recession Officially Ended July 2009Temp Penetration Trend Turns Positive Oct 20091 st Job Growth>100,000 (Household Survey) Nov 20091 stJob Growth(Payroll Survey) Temp Employment Temporary help serviceslost 1,200 jobs.Why is the Temp Penetration Rate Important? Temporary Help Employment is a Leading Indicator for Nonfarm EmploymentStaffing 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:1.71%no change Job Loss/Gain: + 54,000 JobsUnemployment Rate:9.1%+0.1% I Unemployment Rate: Bachelors Degree or higher Source: Bureau of Labor Statistics,American Staffing Association Jan Feb March April May 4.2% 4.3% 4.4% 4.5% 4.5% Nonfarm Payroll Job Growth Details Jobs Added/Lost Private Sector 83,000 Government Sector -29,000 Total 54,000 Job GainsChange from Previous MonthProfessional & Business Services44,000 Financial Activities3,000 Construction 2,000 Education &34,000 Health Services -Education6,600 - Healthcare17,400 - Social Assistance 9,800 Job LosesChange from Previous MonthGovernment-29,000 Retail Trade-8,500 Leisure & Hospitality-6,000 Manufacturing-5,000
  2. 2. Video, Job Loss/Gain & GDP 4th Quarter GDP:1.8%(2nd Estimate) Source:CNBC, Bureau ofEconomic Analysis, Bureau of Labor Statistics (BLS), Wall Street Journal Video & Economic Summary Videos start with 15 sec commercial Tracking Job Growth2011 Disappointing Jobs Report ( 7 min 31 sec)Austan Goolsby, Chief Economist,President's Econ Adv Board (June 5, 2011) Click to Play Economists Reactions to the Weaker than expected Jobs Numbers: The leading indicatorsof payroll growth, Temporary Help-Supply Payrolls, have stalled. We regard this as disconcerting. Temporary Help Supply payrolls actually decreased 1,000, following a decline of 2,000 in April. The back-to-back declines are disconcerting, although not yet compelling. Temporary Help-Supply payrolls are regarded as a leading indication of broader payroll trends. The general trend in Temporary payrolls remains consistent with further acceleration in private sector payrolls.Ray Stone, Stone & McCarthy The deceleration in employment growth , together with a string of disappointing results on other indicators, calls into question the sustainability of the recovery. However, we are still inclined to believe that this is a temporary soft patch reflecting supply chain disruptions, a spike in gasoline prices (which has been partially unwound), and weather-related influences. Also, we believe that calendar effects and other special factors had some impact on the May employment data. However, for this thesis to be confirmed, we will need to see a solid rebound in job growth in June something north of +150,000.David Greenlaw, Morgan Stanley 2009 2010 Components of GDP 1st 2nd 3rd 4th1st 2nd 3rd 4thConsumers-0.34% -1.12% 1.41% 0.69% 1.33% 1.54% 1.67% 1.53 (Personal Consumption) *Businesses-6.80% -2.30% 1.22% 2.70% 3.04% 2.88% 1.80% 1.45 (Gross Private Domestic Investment) Net Exports(Exports-Imports) 2.88% 1.47% -1.37% 1.90% -0.31% -3.50% -1.70% -.06 Government-0.61% 1.24% 0.33% -0.28% -0.32% 0.80% 0.79% -1.07 Total GDP-4.90% -7.00% 1.60% 5.00% 3.70% 1.72% 2.56% 1.85 *Inventories-1.09% -1.03% 1.10% 2.83% 2.64% 0.82% 1.61% 1.19% component of Business
  3. 3. Projections & Job Growth History GDP ProjectionsSurvey 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 Mays Jobs ReportJob Market Loses Momentum (Wall Street Journal)