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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: patron_anejo_por_favor who wrote (34709)	8/2/2005 6:43:45 AM
From: Chispas	Respond to of 116555

LAYOFFS WILL SLAM MARTS . By JOHN CRUDELE August 2, 2005 -- FRIDAY'S employment report could be too disappointing to explain away. I'm going out on a thin limb here since Wall Street — the land of eternal optimism born of never-ending hucksterism — is expecting a reasonably healthy 180,000 jobs to have been created in July. That, of course, would be great. We all want the nation's job market to expand. But in the interest of actually coming up with an estimate based on unbiased analysis I offer you these thoughts: corporations are again laying off lots of workers and — more importantly — there will be no statistical aberration to help the upcoming jobs report. First, the corporate situation. I spoke recently with John Challenger of Challenger, Gray & Christmas — the Chicago outplacement firm that keeps tabs on these things — and he says there were 110,996 announced layoffs in June. That's the largest amount since January of 2004. "There does seem to be a real surge in layoffs," Challenger said. The big layoff number in June is even more disturbing because this is not typically a month when companies announce cutbacks. January, for instance, is prime time for breaking bad news. Already in 2005 companies have said they plan to cut 538,274 jobs, which is 14 percent higher than last year. And layoffs didn't seem to have eased up in July either, although numbers aren't yet available. But the real problem with this Friday's jobs report will be in assumptions made by the Labor Department on jobs being created by newly-formed companies. This is called the Current Employment Statistics Net Birth/Death Model in case you want to look it up on www.bls.gov. The problem is this: the government isn't going to add any fictitious jobs to this month's count. Instead — for only the second time this year — it will be deducting jobs. January is the other month when the Bureau of Labor Statistics believes there are more companies going out of business than just getting started. As I've been saying for the past 18 months, the headline monthly job figures have been in lockstep with these assumptions. Since the spring of 2004, the employment data coming out the first Friday of every month were usually stronger than expected if there were generous birth/death assumptions, and weaker when there weren't. That pattern broke down this past spring when two months were weaker than expected despite optimistic assumptions for these new-company jobs. This seemed to suggest that the real job market, devoid of statistical noise, was — is weaker than the experts anticipated. So, what about this Friday's report? In July of 2004, the government subtracted 80,000 jobs from its count because it thought more companies were going out of business than just being incorporated. And it's a good bet that the government's computers will make the same pessimistic assumptions this year. ................................... Registration Req'd - nypost.com