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Economy in Brief

Manpower Survey Indicates PositiveBut Limited Jobs Growth
by Tom Moeller March 10, 2010

The employment agency Manpower Inc. indicated roughly stable corporate hiring intentions for the second quarter. Their seasonally adjusted reading of 5 compared to a 1Q figure of 6, but both were improved from the net-layoff readings late during 2009. Those recession readings were the worst of the series' history which dates to 1976. Since 1990 there has been a 77% correlation between the Manpower Index and the three-month change in payroll employment.

Hiring intentions for 2Q improved in the relatively stable education & health, government, information, nondurable manufacturing and professional business service sectors, but sustained improvement in each versus last year was scattered. Intentions in the construction and durable manufacturing sectors continued to indicate net-layoffs though the layoffs in the latter sector diminished considerably.

The Manpower Inc Employment Outlook Survey is a quarterly measurement of hiring intentions of more than 15,000 employers in 473 cities. Employers declare their intentions to increase, decrease, or maintain the size of their present workforce for the upcoming three-month period. The survey was designed with the assistance of the Survey Research Center of the University of Michigan. The current seasonal adjustments are by Manpower, Inc. Haver calculated the historical seasonally adjusted series.

The data are available in Haver's SURVEYS database. Manpower indicates that seasonally-adjusted industry data are under development.

Assessing the Impact of Education and Marriage on Labor Market Exit Decisions of Women from the Federal Reserve Bank of Atlanta is available here.

Manpower Inc. Employment Outlook Survey 2Q '10 1Q '10 4Q '09 3Q '09 2009 2008 2007
All Industries Net Hiring Strength (SA) 5 6 -2 -2 1 13 18
Increase (NSA) 16  12  12  15 15  24  27
Decrease (NSA) 8 12 14 13 14 11 9
Construction -12 -10 2 -4 -5 -- --
Education & Health 4 2 -4 0 1 -- --
Financial Activities 2 1 2 2 3 -- --
Government -3 -8 -4 -2 -1 -- --
Information 0 -5 -4 -5 -3 -- --
Leisure & Hospitality 4 2 18 14 13 -- --
Manufacturing - Durable -3 -8 -6 -7 -5 -- --
Manufacturing - Nondurable 1 -3 0 -4 -2 -- --
Professional Business Services 5 3 8 9 9 -- --
UK Industrial Production Losses Momentum – So What?
by Robert Brusca March 10, 2010

UK IP Sinks - Industrial output in the UK was set back in January unexpectedly. Consumer durables and intermediate goods output fell sharply in January a month with some considerable weather disruptions. January is sharp departure from December when output rose by 0.9% on advances in all major sectors. The detailed industry results do not show anything worrisome as the key detailed industries do not reveal any with back-to-back declines. Instead we see a 5.5% drop for textile and leather after a 3.4% gain in December- that is volatility not weakness. Motor vehicles also saw output fall by 2% in January after surging by 5.6% in December. While the January result was unexpected, ‘unexpected’ does always mean the start of a new trend, sometimes it is just a spate of volatility.

Unexpected events elsewhere - The month brought other unexpected developments elsewhere as German exports fell and the German trade surplus was chopped nearly in half, unexpectedly. We might be worried except that this German report was preceded by a very strong orders report that had strong foreign orders well represented. The German CPI was up a bit more than expected as well – something the ECB will be watching. In Asia, China’s exports were so strong they had everyone geared for the prospect of some sort of global demand revival. Japan’s core machinery orders, strong in a previous release, backed off in this month’s report setting back hopes for an investment revival there. The truth of the global economy is hidden somewhere in this tangle of volatile monthly reports.

Warning! Caveat recovery - UK Prime Minister Gordon Brown warned on the fragility of the expansion saying data would continue to go to and fro and that recovery was not assured. Thanks for that confidence booster…

Biz as usual - What you usually can depend on in recovery periods is to get mixed signals. That much appears to still be true. One source of volatility and concern may be lessening, however. Former EU Commission Prodi declared the Greek crisis to be over and while that could be a bit of good news we have to wonder if the declaration is premature given the nature of Greece’s difficulties and past transgressions. One good bond offering with high interest rates hardly signals that all is well. Spain, Portugal and Italy will remain as EMU countries under the markets’ sharpest eye in the wake of the Greek problem even if Greece remains on an upswing.

Caveats aside, odds and data still favor the recovery continuing - The UK recovery has flashed hot and cold signs for some time in this cycle. The BOE is letting an inflation overshoot go by without acting, a clear indication that the Bank does not see any overheating. Data releases like today’s IP report only confirm the good judgment of the Bank and its ability to see past monthly volatility in the run of reports. The most likely situation is that growth in the UK and elsewhere continues. The recession was deep, there is pent up demand, in Europe; the strong social welfare system there helps to preserve demand. Meanwhile, recovery still seems to be afoot around the world and for the most part trade data have been strong confirming that some sort of global revival is in place. While German export data may seem to question the notion of strong growth and global economic revival, strong growth in China’s exports seems to brand the German data as anomalies (along with German order flows). As always we will stay tuned to the various monthly reports. But there is no basis for the belief that the recovery is being untracked apart from a streak of pure pessimism.

Pessimists unite! You have nothing to lose since nothing is invested in the market! - We know pessimism is still alive and well and that part of that reluctance traces to the still low level interest rates. Central banks are reluctant to boost rates even though market rates are for the most part high above the levels banks are paying in the interbank markets. Low official rates are contributing to money (wealth) staying on the sidelines. We have had a very strong one-year rally in global stock markets with low participation because so many have been unwilling to commit funds even though he past year’s rally was one of extraordinary scope. Money is continuing to pile up on the sidelines and pessimism is now partly the product of a sour grapes attitude by would-be investors who clearly have stayed on the side lines for far too long. These sorts of considerations dog the ability of those who have stayed out to objectively characterize the progress of the markets and offer an unbiased the assessment of the economy and its prospects. It will take a period of job growth being restored and rates elevating to bring these skeptical once-burned twice-shy (and therefore burned again by a different sort of fire) investors back to the markets. Until then expect each monthly setback to be greeted by the hoots and hollers of the pessimists who have sat back and largely missed the rally to date. It’s all the fun that they can have.

Saar except m/m Mo/Mo Jan
3Mo 3Mo 6mo 6mo 12mo 12mo Q1
MFG -0.8% 0.9% 0.1% 0.9% 4.1% -0.4% 2.0% 0.2% -2.0% -0.9%
C-Durables -1.8% 0.7% -1.0% -7.9% -4.6% 1.7% 7.3% -0.2% -0.2% -9.4%
C-Non-durables 0.3% 0.2% -0.2% 1.3% -3.8% -3.9% -3.1% -1.4% -1.2% 2.4%
Intermediate -1.3% 0.4% 0.7% -1.0% 3.0% -6.3% -3.8% -4.6% -6.6% -5.0%
Capital 0.8% 1.0% 0.7% 10.1% 16.3% 10.5% 9.1% 4.9% -0.9% 10.3%
Memo: Detail 1Mo% 1Mo% 1Mo% 3Mo 3Mo 6mo 6mo 12mo 12mo Q1
Food Drink&tobacco 4.1% -0.1% -1.4% 10.5% -7.7% 1.2% -5.1% 2.0% -0.5% 23.0%
Textile&Leather -5.5% 3.4% -5.2% -26.6% -18.4% -15.6% -4.4% -9.1% -6.7% -27.2%
Motor Vehicles & trailer -2.0% 5.6% 2.2% 24.7% 30.3% 13.5% 37.0% 26.8% 8.3% 14.4%
Mining and Quarry 1.4% -4.9% 5.1% 5.6% 4.0% -10.1% -13.4% -8.8% -12.0% -1.9%
Electricity, gas&H2O 1.3% 3.9% -3.3% 7.3% -4.7% -0.6% -4.7% -5.2% -6.7% 17.7%
U.S. Monthly Budget Deficit A Record
by Tom Moeller March 10, 2010

As the Federal government's February budget deficit reached a record $220.9B, the figure pulled the Fiscal YTD deficit to $651.6B which was larger than any past deficit for twelve months, except 2009.

Recession pulled net revenues during the first five months of FY'10 down 7.0% y/y. Individual income tax receipts fell 14.0% y/y through February reflecting higher unemployment. The rate of decline, however, is half that at the end of last year. Corporate tax receipts mirror the decline in profitability and fell 14.1%, though that rate of decline also eased sharply. Year-to-date, employment taxes fell a record 3.5% but unemployment insurance tax receipts rose a surprising 3.8%. Estate & gift taxes fell by one-third after an 18.6% decline during FY'09.

Overall outlays were boosted 16.8% during the first five months of FY'10 as Social Security payments (21% of outlays) rose 7.8% and net interest payments (5% of outlays) started to rise with higher rates. Medicare expenditures (12% of outlays) fell slightly but other health care services spending (10% of outlays) rose 21.3%. "Income security" spending (11% of outlays) jumped by one-quarter while defense spending (19% of total outlays) rose 2.9%.

The Government's financial data are available in Haver's USECON database, with extensive detail available in the specialized GOVFIN.ยท Fiscal Policy Choices is the title of CBO Director Doug Elmendorf's presentation to the National Association for Business Economics on Monday and it can be found   here

US Government Finance   February FY 'YTD FY 'YTD FY 2009 FY 2008 FY 2007
Budget Balance $-220.9B $-651.6B  $-651.6 $-1,417.1B $-454.8B $-161.5B
Net Revenues $107.5B $800.5B -7.0% -16.6% -1.7% 6.7%
Net Outlays $328.4B $1,452.1B 16.8% 18.2% 9.1% 2.8%
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