David Rosenberg hasn’t wavered a bit on his view that the economy’s still in horrendous shape and the 70% market boom of the past eight months has been a violent bear-market rally.
But even Dave is now having to admit that the jobs picture is getting better, albeit slowly.
The current rate of initial claims, Dave says, is consistent with modest job growth. So we could see payrolls growth as early as December.
[This week’s initial jobless] claims number cannot be dismissed out of hand despite the help from some aggressive seasonal factors.
For the week ending October 24, they were at 532,000; on October 31, they were 514,000; on November 7, they were 505,000; on November 14, they were 501,000; and as of November 21, they
had declined to 466,000. So the trend is clearly down — falling now for four weeks in a row. This is the lowest level on claims since the week of September 13, 2008 and this figure has not been below 500,000 since the opening week of 2009; and as an exclamation mark, the four-week moving average also dipped to 496,500 from 513,000 — first time below the 500,000 mark in a year.
The Conference Board’s Consumer Confidence Survey data did show yesterday that in November people were having a tougher time finding a new job than at any other time in the past 26 years, so keep in mind that the claims numbers reflect firings, not hirings. The firings have now abated, but it remains to be seen how the job market evolves with a record 9.3 million Americans working part-time who would rather have a full- time job (double the norm) and with the workweek at a record low of 33 hours. All companies have to do is take the workweek back up to where it was when the
recession began and right there it would create the equivalent of two million new jobs (but without actually adding headcount); or take the number of people that were furloughed into part-time back onto full-time, which would also be equivalent to de facto job creation of two million jobs.
The firings have now abated, but it will be interesting how the job market evolves with a record 9.3 million Americans working part- time and the workweek at a record low of 33 hours.
If we see confirmation of this 466,000 number in next week’s data, it would be a pretty safe bet to say that claims have finally gravitated into a 450,000- 475,000 range, which in the past was consistent with very modest job growth, but growth nonetheless.
Economists have had trouble this cycle because of the nature of the recession being a credit contraction and asset deflation phase as opposed to a garden-variety inflation/excess inventory downturn, so relying on the past has been tricky and faulty. Be that as it may, look for upward revisions now for the December 4th release of Street estimates for nonfarm payrolls (the consensus is currently at -120,000, which that could now come down to -100,000 or lower) and talk will soon grow of a positive-print as early as the December or January Nonfarm payroll reports.