Manufacturing Is in Recession. Jobs Market Is Stalling.

Initial Jobless Claims (week ended 1/30/2016)

– Initial Claims seasonally adjusted  285,000. Previous was 277,000
– Initial Claims  unadjusted, totaled 311,956 an increase of 16,296 from previous
– 4-week Moving Average    284,750. Previous was 282,750

The jobs market which has been a positive part of the economy is starting to stall.

Challenger Job-Cut Report

– Announced Layoffs 75,114. Previous was 23,622

Retail and energy were hard hit.  Wal-Mart was a sizable piece of the layoff picture.

Productivity and Costs (4thQ2015)

– Nonfarm productivity quarter/quarter seasonally adjusted annualized rate -3.0%. Previous was +2.1%
– Unit labor costs quarter/quarter seasonally adjusted annualized rate  +4.5%. Previous was +1.9%

Productivity is GDP/hours worked.  Very weak (+0.7%) growth in GDP combined with increasing labor cost hit Productivity hard.  Productivity had been weak for three years.  This is likely an indication that the jobs we added are low productivity (retail and food service) jobs.  Also, we have been losing some high productivity jobs such as oil rig jobs.

 

Factory Orders (December 2015)

– Factory Orders month/month -2.9%. Previous was -0.7%.

As I have been saying – we are in a manufacturing recession. While manufacturing may represent a much smaller part of the economy than the service sector it produces a higher profit percentage.