The US monthly jobs report is among the hardest of the high frequency data for the market to forecast. There are few inputs and the inputs are there are track the general trends but frequently deviate on a month-to-month basis.
The Bloomberg consensus is for the private sector to have added 125k private sector jobs in October, this is around the 3 and 6 month averages. The ADP report showed an increase of about 110k from the private sector. The weekly initial jobless claims fell between the Sept and Oct NFP survey weeks. The ISM manufacturing employment index slipped 0.3 points but held above 50. The ISM non-manufacturing rose to 53.3 from 48.7.
The average weekly hours were likely flat while hourly earnings likely matched the Sept increase of 0.2%. With state and local government lay-offs continuing, government employment likely once again dragged down the headline number. Recently, relatively good US employment reports have seen the dollar decline as risk-on tactics dominate the market response.
The employment report also gives us an opportunity to consider a couple of broader aspects of the US employment picture. First, a recent issue in the popular press is about the value of a college education. This is not the space to debate the issue at length, but the employment figures are interesting (from the Census Bureau):
Education end ’10 unemployment Sept ’11 unemployment
Less than high school grad 14.7% 15.3%
HS grad no college 9.7% 9.8%
Some College/Associate 8.4% 8.1%
Bachelor’s/more 4.2% 4.8%
Another issue is the youth unemployment. This is, arguably one of the forces, leading to social protests in the industrialized countries. At the end of last year, the Economist reported that the 15-24 year-old unemployment rose 4.9 percentage points to 18.4% in the 2007-2009 period and by the middle of last year was just below 20%.
In the US, the Sept employment report showed that for 20-24 year-old part of the work force, unemployment was 14.3% and for 25-29 year-olds it was 10.3%. It varies significantly by race, less so by gender.
White unemployment for those two age groups is 12.3% and 8.6% respectively for the two age group 20-24 and 25-29. For Asian young people, the unemployment rates are 13.4% and 9.9%. For black youth the unemployment rate is 25.3% and 19.4% respectively.
While understanding that education and race are not independent variables, integrating young people into the workforce has been particularly challenging during the crisis. Germany’s extensive apprenticeship programs appear to enjoy the highest success in smoothing the transition into the labour market.
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