Unemployment now stands at 8.1%, up from 7.6%

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  • Fri, Mar 06, 2009 - 01:42pm



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    Unemployment now stands at 8.1%, up from 7.6%

Unemployment Rate 8.1% vs 7.9% consensus
February Nonfarm Payrolls -651K vs -650K consensus, prior revised
to -655K from -598K
According to the latest government information, 651,000 nonfarm jobs were
lost in February. Economists expected nonfarm payrolls to decline by 650,000.
Meanwhile, January’s reading was revised upward to show a loss of 655,000
jobs. Manufacturing payrolls declined 168,000, which is less than the decline of
200,000 that was widely expected. Average weekly hours worked were unchanged
from the prior reading and in-line with expectations at 33.3 hours. Average
hourly earnings were up 0.2% month-over-month. That was in-line with
expectations and unchanged from the prior month’s downwardly revised reading.
Unemployment now stands at 8.1%, up from 7.6% in January. Economists expected
unemployment to total 7.9% in February.

Updated: 05-Mar-09 08:48 ET
08:48 ET
Back on the Defensive:

The final numbers yesterday showed decent gains for the major indices, yet
they belied an otherwise poor close that saw each of them come well off their
highs in the final 30 minutes of trading.

The weak finish, word that the Bank of England is set to pursue a
quantitative easing strategy after lowering its key lending rate to just 0.50%,
lackluster February same-store sales from the retailers, negative comments from
Moody’s on a number of major banks (BAC, JPM, WFC), and reports that China
failed to announce additional stimulus spending, as had been speculated, have
all contributed to the bearish bias in the futures market today.

If the current indication holds, the cash market would be expected to start
the day with a decline of about 2.5%.

Yesterday the idea that China might boost its stimulus spending helped put a
bid in the market.  It was an attractive trading idea for many that China could
lead the world out of this economic downturn.  That was peculiar given the talk
not that long ago that China’s industrial revolution was expected to forestall a
global recession.  That didn’t happen, as the effects of the U.S. downturn made
it painfully clear that the decoupling theory was a bit ahead of its time.

In any event, one needs to be careful what one wishes for when it comes to
China’s growth at this delicate stage.  Absent a recovery in the U.S., a
resurgence of growth in China could end up doing more harm than good for global
recovery efforts since it would simply drive up commodity prices that, in turn,
would retard recovery elsewhere.

Separately, General Electric (GE) is defending GE Capital’s financial
position this morning. Thus far, that seems to be doing little to help.  Shares
of GE were trading down in pre-market action.

Fellow Dow component Wal-Mart (WMT) checked in with a 5.1% increase in
February same-store sales versus the Briefing.com consensus estimate that called
for an increase of just 2.4%. 

Wal-Mart’s news didn’t give much of a boost to the market, though, which
recognizes such strong sales at the discount leader at this juncture are more a
coincident indicator of consumer weakness than a leading indicator of strength. 
This is good news for Wal-Mart, but not so great in terms of the bigger

On that note, initial jobless claims for the week ended Feb. 28 fell 31K to
639K.  That was slightly better than the consensus estimate of -650K.  Despite
the improvement, the 4-week moving average climbed to 641,750 from 639,750.

Continuing claims dipped 14K to 5.106 mln while the 4-week moving average was
bumped up to 5.011 mln from 4.934 mln.

The claims data may be better than headline expectations, but they don’t
offer any needed signs of meaningful improvement for a weak labor market.

In other economic news, Q4 productivity was revised lower to -0.4% from an
originally reported 3.2%. It is the result of the substantial downward revision
to real GDP from -3.8% to -6.2%.

Lower output over essentially the same
hours worked means lower productivity.

The lower output and productivity
measure also increased the unit labor cost calculation to a high 5.7% annual
rate from a previously reported 1.8%.

The revisions to the hours worked
or compensation data weren’t great either, but with lower output, the cost per
unit of output is higher.  This high unit labor cost figure therefore represents
a sharp decline in output rather than underlying price pressures which are
likely to continue. It is perhaps a temporary factor for businesses not to lower
prices, but will not be inflationary in the face of weak demand over the year

Patrick J. O’Hare,


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