Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
Evergrande China's Lehman's Moment, Tip of the Ice Berg in Financial Crisis 2.0 - 21st Sep 21
The Fed Is Playing The Biggest Game Of Chicken In History - 21st Sep 21
Focus on Stock Market Short-term Cycle - 21st Sep 21
Lands End Cornwall In VR360 - UK Holidays, Staycations - 21st Sep 21
Stock Market FOMO Hits September CRASH Brick Wall - Dow Trend Forecast 2021 Review - 20th Sep 21
Two Huge, Overlooked Drains on Global Silver Supplies - 20th Sep 21
Gold gets hammered but Copper fails to seize the moment - 20th Sep 21
New arms race and nuclear risks could spell End to the Asian Century - 20th Sep 21
Stock Market FOMO Hits September Brick Wall - Dow Trend Forecast 2021 Review - 19th Sep 21
Dow Forecasting Neural Nets, Crossing the Rubicon With Three High Risk Chinese Tech Stocks - 18th Sep 21
If Post-1971 Monetary System Is Bad, Why Isn’t Gold Higher? - 18th Sep 21
Stock Market Shaking Off the Taper Blues - 18th Sep 21
So... This Happened! One Crypto Goes From "Little-Known" -to- "Top 10" in 6 Weeks - 18th Sep 21
Why a Financial Markets "Panic" May Be Just Around the Corner - 18th Sep 21
An Update on the End of College… and a New Way to Profit - 16th Sep 21
What Kind of Support and Services Can Your Accountant Provide? Your Main Questions Answered - 16th Sep 21
Consistent performance makes waste a good place to buy stocks - 16th Sep 21
Dow Stock Market Trend Forecasting Neural Nets Pattern Recognition - 15th Sep 21
Eurozone Impact on Gold: The ECB and the Phantom Taper - 15th Sep 21
Fed To Taper into Weakening Economy - 15th Sep 21
Gold Miners: Last of the Summer Wine - 15th Sep 21
How does product development affect a company’s market value? - 15th Sep 21
Types of Investment Property to Become Familiar with - 15th Sep 21
Is This the "Kiss of Death" for the Stocks Bull Market? - 14th Sep 21
Where Are the Stock Market Fireworks? - 14th Sep 21
Play-To-Earn Cryptocurrency Games Gain More and Is Set to Expand - 14th Sep 21
The CashFX TAP Platform - Catering to Bull Investors and Bear Investors Alike - 14th Sep 21
Why every serious investor should be focused on blockchain technology - 13th Sep 21
SPX Base Projection Reached – End of the Line? - 13th Sep 21
There are diverse ways to finance the purchase of a car - 13th Sep 21
6 Tips For Wise Investment - 13th Sep 21 - Mark_Adan
Gold Price Back Below $1,800! - 10th Sep 21
The Inflation/Deflation debate wears on… - 10th Sep 21
Silver Price seen tracking Copper prices higher - 10th Sep 21
The Pitfalls of Not Using a Solicitor for Your Divorce - 10th Sep 21
Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
This Boom-Bust Cycle in US Home Ownership Should Give Home Shoppers Pause - 9th Sep 21
Stock Market September Smackdown Coming Next? - 9th Sep 21 - Monica_Kingsley
Crazy Crypto Markets How to Buy Bitcoin, Litecoin for Half Market Price and Sell for TRIPLE! - 8th Sep 21
Sun Sea and Sand UK Holidays 2021, Scarborough in VR 180 3D! - 8th Sep 21
Bitcoin BTC Price Detailed Trend Forecast Into End 2021 - 8th Sep 21
Hyper Growth Stocks - This billionaire is now using one of our top strategies - 8th Sep 21
6 common trading mistakes to avoid at all costs - 8th Sep 21
US Dollar Upswing, S&P 500 and Nasdaq Outlook - 7th Sep 21
Dovish Assassins of the USD Index - 7th Sep 21
Weak August Payrolls: Why We Should Care - 7th Sep 21
A Mixed Stock Market - Still - 6th Sep 21
Energy Metals Build Momentum; Silver & Platinum May Follow - 6th Sep 21
What‘s Not to Love About Crypto Market Fireworks - 6th Sep 21
Surging US Home Prices and Gold – What’s the Link? - 6th Sep 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

June's Abysmal U.S. Jobs Report is Just the Beginning

Economics / Employment Jul 11, 2011 - 06:19 AM GMT

By: Money_Morning

Economics

Best Financial Markets Analysis ArticleKerri Shannon writes: The June jobs report was abysmal - bud sadly it's just the beginning.

After just a few months of modest, stimulus-induced improvement the jobs market is again sliding backwards into a "new normal" characterized by even higher rates of unemployment.


"Unfortunately, I expect chronic high unemployment to be with us for years, and to borrow a phrase from Bill Gross of PIMCO, that's the real ‘new normal,'" said Money Morning Chief Investment Strategist Keith Fitz-Gerald.

The dismal job growth boosted the unemployment rate to 9.2% in June from 9.1% the month prior. The labor force declined by 270,000, and the total amount of people out of work, including those who have stopped looking, is up to 16.2%, from 15.8% the month before.

"It is about as bad as anyone could imagine," Nigel Gault, chief U.S. economist for IHS Global Insight, told MarketWatch. "On face value it does suggest we are grinding to a halt," he said.

Indeed, the meager 18,000 jobs added in June actually led some analysts to question the report's accuracy.

"At first, when I heard it, I thought maybe they had announced the wrong numbers, they were so bad," Robert Brusca of Fact and Opinion Economics told CNN.

Economists had expected an increase of 125,000 jobs, just enough the economy needs to compensate for population growth.

Worse yet, May and April job numbers were revised to show results that were even worse than previously reported. The May gain of 54,000 jobs was lowered to 25,000, and the number of jobs added in April fell to 217,000 from 232,000.

"You look at the charts for private sector growth and you could see we were building a nice, steady crescendo," Brusca said. "All of a sudden the bottom fell out!"

The total number of unemployed workers who are actively looking for work is now 14.1 million, with 6.3 million out of work for six months or more.

Some economists had high hopes for the June jobs report, since alternate measures of employment statistics had shown promise. The ADP payrolls report last Thursday showed 157,000 private-sector jobs had been added.

But according to the Labor Department the private sector added just 54,000 jobs, and that gain was offset by a loss of 39,000 government jobs.

No More Jobs to Give
Private-sector employees account for 70% of the workforce. And as more government jobs are cut, private employment won't be able to bolster job numbers since it's experiencing a long-term slowdown of its own.

The new problem facing the workforce is not that U.S. companies don't have money to hire, it's that they don't need as many workers. Businesses are learning to survive with fewer employees, relying more on increased productivity and efficiency. When companies do have enough cash to spend, they put it toward new technology or M&A activity instead of hiring.

Companies have been regaining profitability, but the increase is not mirrored in the labor market, widening the gap between capital spending and employment.

"Today companies are producing more goods and services than ever before," said Bernard Baumohl, chief global economist at The Economic Outlook Group. "The GDP now is bigger than it ever has been before. And the economy is able to do that with 7 million fewer workers. If we can do so much with so much less, where is the incentive to hire?"

A Bank of America Merrill Lynch report released in March stated inventory rebuilding, low borrowing costs and equipment tax breaks had encouraged companies to spend - not hire.

And the companies that are hiring aren't doing so in the United States. They're looking elsewhere.

"America's stubbornly high unemployment rate is not likely to drop much in the future because - among other reasons - the biggest employers in this country have been exporting jobs overseas," said Money Morning Contributing Editor Shah Gilani. "General Electric Co. (NYSE: GE), Caterpillar Inc. (NYSE: CAT), and Cisco Systems Inc. (Nasdaq: CSCO), are just a few of the U.S. stalwarts that in the past decade have expanded their overseas operations at the expense of U.S. employment."

Jeffrey Immelt, GE's chief executive, told The Wall Street Journal that this shift doesn't reflect a relentless search for the lowest wages, but instead a search for active consumers.

"We've globalized around markets, not cheap labor," said Immelt. "The era of globalization around cheap labor is over," he said in a speech in Washington this spring. "Today we go to Brazil, we go to China, we go to India, because that's where the customers are."

What Investors Need to Watch
As the U.S. job market continues to disappoint, and U.S. companies shift their business focus to overseas markets, investors need to watch where the money goes.

"It doesn't take more than a quick glance to see that the capital flowing out of the United States and into other countries has been very beneficial for a lot of corporations," said Gilani. "Those are the corporations whose shares you should be buying."

Some of the companies with the best opportunities are those that invest in foreign consumer growth, as the United States continues to struggle with high unemployment and a rocky recovery. Netflix Inc. (Nasdaq: NFLX) is one of the latest companies to charge into emerging markets, announcing last week it will start service in 43 countries in Latin America and the Caribbean.

"Continue to buy global growth and global income because the U.S. is holding things back even as other markets with adult supervision charge ahead," said Money Morning's Fitz-Gerald.

Source :http://moneymorning.com/2011/07/11/junes-abysmal-jobs-report-is-just-the-beginning/

Money Morning/The Money Map Report

©2011 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or 72 hours after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in