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Ignore this. No big deal. Not that there is a recession or anything. Well.. the recession has been over for some time technically I suppose, but it’s not like job growth is getting anyone excited. Anyway for us: Total nonfarm jobs in the Pittsbrugh region for October 2011 come in at the highest level for an October ever.  Things that fascinate me. From the Legal Intelligencer on Marcellus Shale induced migration to Pittsburgh… of lawyers of course. See: Marcellus Shale Attracts Laterals From Miles Around Curious quote in there. I can’t quite figure why it is there:
Ok then… We’ve become the place to self-actualize. The New New Pittsburgh. I was born somewhere else.  Not surprising, but someone is unhappy with Pittsburgh City Council’s vote to let there be a public referendum on gas drilling within the city. See the PR from the Pennsylvania chapter of the American Petroleum Institute: Pittsburgh City Council Must Focus on Job Creation. You would think such a press release would want to include some data (any data at all???) on how job creation in the city of Pittsburgh is doing? or maybe how the Pittsburgh region’s economy is doing in comparison to the rest of the nation to emphasize their point? It’s just that reading the PR you would think there is some clear data on how the Pittsburgh economy is failing compared to elsewhere just because there is a public debate over gas drilling. Bueller……… Maybe the political opposition to shale gas development is why all those young people are moving into the city. (I’m joking…. sort of). Seriously there is an interesting story in the very existence of that press release. When did the Pennsylvania chapter of the API decide to jump into the public media game over Marcellus Shale. There isn’t some soap opera food fight between them and the Marcellus Shale Coalition is there. Strange that they would pop up in the MSC’s space like that.  It’s like the Groundhog Day of economic impact reports released again yestersay. I guess this will be an annual event. I guess I really need get back to my Marcellus Shale experiment from last week. Last week I had put up a chart, deliberately unlabeled in part with some data on employment. The horizontal/time axis was unlabeled because I had intentionally put the most recent data on the left. The purpose was to free the interpreter from some preconceptions and then see what they thought. I had said the data was the time series of ‘new hires’ in the industry which is a metric that had been in the news of late, but the data I pulled was inadvertently the total employment numbers which I then scaled incorrectly because I thought it was quarterly flow data. So I pulled the chart down to avoid confusing those who read it. At least I gave the social media gnomes on retainer something to read all weekend long.  So the questions were how big a deal is this trend? Through 2009 the industry had not even regained the levels of employment of its recent past. Perspective on the scale is always essential and realize Pennsylvania total employment is roughly 5.9 million currently. Even this chart is not all Marcellus related of course. In fact you can’t even say most of it is Marcellus related since there was obviously there was employment before the first Marcellus well went in. Generously the Marcellus numbers are coming from just the delta, or change, since 2007 give or take. Even that I wonder about a bit since there is also this little industry related to coal mining that still exists in Pennsylvania and for those watching it, coal prices have been skyrocketing in recent years. It’s part of the story in there as well. The data there only has full year data through 2009 thus far, but other data available for 2010 and into 2011 indicate the trend in employment is picking up. The current employment in this time series may be over 30K by now, so a gain of 10K over the last couple of years. 10K is a lot of jobs no doubt, but how big we can debate. For a ballpark comparison it is probably on par with the net gain in jobs at UPMC alone over that time. The numbers you read about are often higher. Economic impact analysis the study of all the indirect and induced impacts new investment and economic activity can have. For sure Marcellus has those additional impacts, just as new investment in most any industry does. So the bigger numbers are not fiction, but their meaning is not always made clear. The report today has an oft quoted, or will be oft-quoted number of 250 thousand jobs. That isn’t an estimated impact now, but a potential (this time more clearly labeled as ‘potential’) total impact including all indirect and induced impacts.. The future is where this all becomes an interesting question as to what is real what is hype, a question that is being debated in a lot of places. The 250K jobs projection is a really interesting number in a lot of untalked about ways. Even with the lingering employment recession inflating the unemployment rolls, the total unemployment count in PA right now is on the order of 470K and that includes a lot of folks in parts of the state with no palpable Marcellus Shale impact to date such as Philadelphia. Half of that state unemployment count alone comes from the Philadelphia MSA, even more if you include the Philadelphia exurban environs and then you probably then need to exclude unemployment in urban Pittsburgh since those folks have no means to get out to the jobs being created for the most part. So if that projection comes close to being true, where will those folks be coming from? That is one of the core questions in all of this. You would think there is a lot of permanent resident migration going on.. and unless they all get here at the last minute that flow must have started in earnest by now. Maybe that is going on, I dunno for now…. but the ‘man-camps’ don’t count as migration into the state for the most part. Like everything else, it’s all a lot more complicated than that, and a lot more complicated than others want to make it seem. There was a good overview of some of the business dynamics in the nation’s natural gas industry in Seeking Alpha just the other day. The biggest things people are really talking about is what is going to happen with the infrastructure for all of this, the pipelines and compressor stations that are going to be needed in ever larger numbers if. That and this issue of a refinery or ‘cracker’ to process the gas being produced here. Keep an eye on that.  By far the best look at the jobs issues surrounding Marcellus Shale to date. WSJ: Gas Drilling Bringing Jobs to Pennsylvania, but How Many? Still deserves a lot more poking, and I suspect folks will be writing long ex post on the jobs projections many take for granted compared to what we eventually will measure. and yes… the regional labor force stats are out and the center of attention is the discrepancy between the big jump in jobs and yet the rise in the local unemployment rate. Various creative ways to describing the confusion; PBT says “quirk of statistics“. While I admit I have some questions myself it comes down to one of three things that has to be going on in the data. One is the ‘quirk’ which would mean there is a sample frame in the CPS for the region that is capturing a bit more folks unemployed than you might expect. It is possible, but it is enough of a discrepancy with the jobs count that I don’t quite believe it can be more than part of the story. At some point the sample frame will rotate folks out so we will eventually know if that is having an impact. Could be some jump up in labor force participation among local residents; though that would be odd to happen fast enough to be showing up as it is. Would be a story unto itself. The third big possibility which I am leaning toward is just sheer migration into the region which would be a direct way to produce the seemingly anomalous increases in jobs, yet rising unemployment rates. So one quirk of the quirk then is that the rising unemployment and employment produces a sizable jump in the labor force to put us awfully close to the region’s all time labor force peak. and to just throw everyone for a loop… unemployment rates are up, even seasonally adjusted rates, out in the middle of where so many of the Marcellus-related jobs are located.  On Wednesday the Challenger Job-Cut Report registered the fewest layoff announcements for any January since the measurement began in 1993. The Challenger Job-Cut Report is produced by Challenger, Grey & Christmas and tracks layoffs by industry and region. According to the report, January 2011 cuts are down 46 percent from those announced in January 2010. It is more common actually to see job cuts increase in January said John Challenger, CEO of Challenger, Gray & Christmas, said in the company’s news release. “But what made this January figure so unusual is that it was so low. Even in the 1990s, when annual job cuts were relatively low, January still averaged more than 74,000 job cuts.”, Challenger said. In a separate positive report, payrolls among private employers rose by 187,000 in January, payroll processor ADP said. Analysts polled by Briefing.com were predicting 145,000 jobs added for the month and ahead of the Friday jobs report from the government, economists surveyed by CNNMoney are predicting the economy added 149,000 jobs in January. The data adds to several of the first credible reports on the health of the job growth in the U.S. Those earlier reports point to significant additions ahead in the labor market for 2011.  Several of the first credible reports on the health of the job growth in the U.S. point to significant additions ahead in the labor market for 2011. On Wednesday, the ADP employment report indicated a gigantic 297,000 surge for December private payrolls. This gain is far outside even the most high-end of expectations for most economist’s forecasts. The ADP report came minutes before an additional Challenger Job cut report which showed the best reading in almost 11 years! Fewer layoffs are being announced — the fewest since June 2000 according to Challenger’s count which fell to 32,004 in December vs November’s 48,711. The drop confirms last week’s report on continued improvement in jobless claims where fewer claimants are filing for unemployment benefits. The news is no doubt welcome for many and underscores the health of a recovery that is delivering on jobs growth more quickly than any recovery in recent history.  
Motor vehicle sales are now enjoying a strong run. U.S.-made vehicle sales held unchanged in November at a 9.1 million unit annual rate. The results surprised many recovery skeptics who were calling for a fizzle in November. Anecdotal reports on used car sales point to strength as do indications on sales at auto-parts retail chains. Motor vehicle sales make up 18 percent of total retail sales. Private-sector employment increased by +93,000 from October to November on a seasonally adjusted basis, according to the latest ADP National Employment Report released today. The best news in the report shows that small businesses (the heart of job producers) actually accounted for more than half of the net additions. (+54,000) The report bodes well for the government’s report released later this week which will also include government job additions. Some analysts now believe net additions in November may have reached close to +200,000 jobs for the month. Manufacturing continues to grow at a healthy pace, according to the ISM report for November. The growth has now been persistent for 16 straight months with the sector now adding jobs for 12 straight months. Construction spending surprisingly jumped in October, rising 0.7 percent, following a 0.7 percent rebound the month before. The market expectation was for a 0.4 percent decrease. Strength was in multifamily housing. (Also a surprise to many) The Beige Book prepared for the December 14 Fed meeting gave the economy a modest upgrade.
The Economic Cycle Research Institute, ECRI, a New York-based independent forecasting group, upgraded their projection for future economic growth. Earlier in the week, ECRI’s managing director and cofounder, Lakshman Achuthan, was on CNBC Monday to discuss the enhancement of their Oct 28, 2010 prediction. Last month the Institute declared that “The much-feared double-dip recession is not going to happen”. This month they go several steps further to say:
Achuthan went on to indicate that although we are a long way off from recovering the 8.5M jobs lost in the recession, the economy has now added back 1M and we are on track for to begin to see significant job gains again. On Tuesday, Chicago manufacturing reports and Consumer Confidence led the good news of the day. Chicagoland continues to report accelerating month-to-month growth in their manufacturing sector. New orders rose in November vs October to extend what is now extremely strong order growth trending. Production is now cranking and like other regions is raising the demand for manufacturing employment which was reported strong in November as well as October. The healthy production is also holding down and unfilled orders, which now reflect a contracting rate. The Chicago report covers both non-manufacturing and manufacturing and indicates that we will continue to see strength in the nationwide purchasing reports for November also to be released this week. Consumer confidence improved in November at a rate better than any economist had projected this month. The Conference Board’s reading jumped more than four points to 54.1 fueled by gains in their “expectations component.” That measurement points to overall improvement in future months. Retail sales also moved higher in the November 27 week according to ICSC-Goldman’s index released on Tuesday. The improvement now registers a year-on-year rate of plus 3.5 percent. For November as a whole, ICSC-Goldman has measured a three to four percent year-year gain. Redbook reported a spike higher in same-store retail sales during the week just past. Its reading at a plus 4.9 percent on-year rate is now the strongest retail growth rate of the whole recovery. All of these reports underscore a solid recovery that is on track and jobs growth (particularly in manufacturing) that continues to increase. You may recall our optimistic prediction in November that the positive trending in the labor market pointed to net jobs growth by Christmas. Revised government numbers on Friday bolstered that assertion. Further it is now clear that for job seekers in 2010, the economy will likely be their friend. With a 5.7% GDP growth in the fourth quarter of 2009, following the 2.2% increase in the third quarter, this recovery is already stronger than the last two.  Furthermore, (as our updated chart illustrates) the U.S. labor market is on the cusp of substantial, sustained positive job growth. And this net jobs creation is coming only two quarters after the end of our deep recession. That’s just one-third of the 21 months it took for job growth to resume after the 2001 recession. A jobless recovery? Not this time. As our chart suggests, given current trending, the U.S economy will likely add more than 100,000 jobs in February. And the picture looks even better come springtime. The government’s monthly job report on Friday showed that the disastrous labor situation that plagued the nation’s economy going into 2009 is now on the mend. The unemployment rate has peaked and now fallen in January to 9.7%. Perhaps the most encouraging sign from the current report was the addition of 52,000 temporary workers. Temporary worker hiring often signals that employers are starting to gear up again. Additionally — the report shows — employers brought many “reduced hour” workers back to full-time work status in January. That concrete move is frequently seen as a precursor to hiring additional workers as recovery takes root. Even cautious economists like Mark Vitner of Wells Fargo remarked on Friday that despite his opinion that the January falling unemployment rate “showed an exaggerated sense of improvement in labor market,” he continued, “But there is improvement. I don’t want to take that away.” You may recall our optimistic prediction in November that the positive trending in the labor market pointed to net jobs growth by Christmas. Revised government numbers on Friday bolstered that assertion.
Further it is now clear that for job seekers in 2010, the economy will likely be their friend. With a 5.7% GDP growth in the fourth quarter of 2009, following the 2.2% increase in the third quarter, this recovery is already stronger than the last two. |
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