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Originally posted at The World Complex blog,

A nice compendium of UK economic data has recently appeared (h/t NESS). You are encouraged to download data sets for your own nefarious purposes.

As an example, I have decided to plot UK unemployment rate against the measure of confidence I proposed on these pages a couple of years ago. To recap, the confidence ratio is the ratio of outstanding public debt (in dollars) to the dollar value of the country's gold holdings. I chose "confidence" as presumably this ratio can only be high for a country in which investors have great confidence. For those of a different mindset, it can be viewed as a measure of a country's ruin (although it would be better to include other foreign currency reserves).
 

UK unemployment data from the site mentioned above. UK debt came from google public data. UK gold holdings came from the data sets available from the World Gold Council. To find the dollar value of gold holdings, I used averaged annual prices available at Kitco. Average conversion rate of GBP to USD available here (although I don't remember where I got it for the original posting, which was up to 2011).

That is a good-looking example of negative correlation. It tells us that the unemployment falls when the confidence ratio is high. Now, there are three ways for a government to increase that confidence ratio:

1) increase debt

 

2) sell off gold

 

3) pray for the price of gold to fall (obviously in a non-manipulative manner that doesn't direct profits to favoured entities).

The fall in confidence that we observed in the latter half of the last decade was entirely due to the rising price of gold. Look at what that did to the unemployment rate! Clearly the fault of gold-bugs and conspiracy theorists. The rising price of gold completely overrode the excellent work of the British Parliament in driving up the country's debt. As for Gordon Brown, he was a hero! His only flaw was in not going far enough. If he had sold all the UK's gold, imagine how low unemployment would be today!

This wouldn't be a post on the World Complex if we didn't do some kind of state space portrait, so here it is: unemployment rate vs. confidence ratio.

Policy decisions of British Parliament and their impact on unemployment can be followed from the above chart. Clearly the government in the 1970s laboured under the delusion that reducing debts would benefit the economy(1). They were rewarded for their imprudence by spiking unemployment in the early 1980s.

By the mid-1990s, they had discovered the golden ticket. With the rising confidence ratio, the UK was rewarded with a falling unemployment rate. Then came Gordon Brown's heroics–by aggressively selling gold he caused the confidence ratio to fall and the UK was showered with new jobs!

There was a small crisis in the latter part of the last decade. But since then–clearly back on track. If the forward evolution of the system follows a similar catenary to the period 1993-2005, then a mere quadrupling of the confidence ratio will restore the unemployment rate to about 6%. The most prudent way to achieve this would be to immediately sell off 75% of Britain's remaining gold (2).

I find this approach to finances inspiring, and am willing to give it a try. Here at The World Complex, the unemployment rate is unusually high (technically I am welcome to go to the office, but the treasury is empty). Looking at my finances, I see the problem–I have very little debt and high savings (although much lower than they were two years ago, thanks to the ongoing turmoil in the junior mining market). To rectify this oversight, I will be issuing bonds. For reasons of fiscal prudence, I will try to keep my confidence ratio below 100, and will begin an auction for $25 million in debt next Thursday (3). No cheap google ad payouts here!

Notes:

(1) the rising price of gold may have had something to do with this. But this proves my point! Rising gold price = rising unemployment, you naughty gold bugs.

(2) in my opinion it would be too difficult to drive the gold price back down to $300/oz.

(3) securities officers and other sarcastically challenged individuals take note–this is intended as sarcasm. Your participation is welcome.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/A3XPKhB5RAo/story01.htm Tyler Durden

Yesterday Goldman explained why glorious and abysmal job numbers would both be sufficient to propel the Stalingrad and Poor to new ATH. So far, they were right. And while the number was not exactly abysmal (ironically, the market is now hung up on weaker than expected data just to make sure Uncle Ben and Uncle Janet stay around as long as possible), it was, as Goldman’s Jan Hatzius just announced, “somewhat weaker than expected, as the disappointment on September payroll growth was only partly offset by back-month revisions, while average hourly earnings grew more slowly than expected.” He said a bunch of other things too, but the most notable was that “this report makes it more likely that the Fed pushes the first reduction in the pace of its asset purchases into 2014… we think that March is the most likely date under our economic forecast.” And since it is now obvious that the Fed is completely oblivious to what ongoing QE does to high quality collateral (which it is now soaking up at a pace of 0.4% in 10Yr equivs per week), full steam ahead it is. We expect Dudley to get his Hatzius marching orders shortly.

From Goldman:

The unemployment rate ticked down, but benefitted from favorable rounding and a small decline in the participation rate on an unrounded basis. Although December remains a possibility, this report makes it more likely that the Fed pushes the first reduction in the pace of its asset purchases into 2014. While the uncertainty is considerable, we think that March is the most likely date under our economic forecast, and the assumption that the next set of fiscal deadlines proves less disruptive than the most recent set.

MAIN POINTS:

1. Payroll employment rose 148k in September (vs consensus 180k). While August employment growth was revised up?as has been the typical pattern in recent years?July employment growth was revised down, leaving the net revision to the prior two months only +9k. By industry, all of the slowdown in job growth relative to August was found in private service-providing industries, as employment in leisure and hospitality fell 13k (vs. +21k in August) and employment in health and education services rose only 14k (vs +61k in August). In contrast, construction employment rebounded (+20k), potentially due in part to more favorable weather in September, while government added 22k jobs, entirely due to the state and local sector. This morning’s report leaves the 3-month trend in payroll job growth at +143k and the 12-month trend at +185k.

2. The unemployment rate declined by one-tenth to 7.2% to one decimal place (vs consensus 7.3%). On an unrounded basis, the decline was a smaller four basis points to 7.235%. Although employment grew by 133k according to the household survey, on a payroll-consistent basis?adjusting for definitional differences between the two surveys?employment declined 195k. While the labor force participation rate held constant to one decimal place at 63.2%, on an unrounded basis the rate continued to edge down slightly.

3. Average hourly earnings grew only 0.1% in September (vs consensus +0.2%), leaving the 12-month rate of increase at 2.1%. The average hourly workweek was unchanged at 34.5. The index of aggregate weekly hours?the product of workers and hours per worker?grew at an only-modest 1.1% annual rate during Q3.

4. Although December remains a possibility, this report makes it more likely that the Fed pushes the first reduction in the pace of its asset purchases into 2014. While the uncertainty is considerable, we think that March is the most likely date under our economic forecast, and the assumption that the next set of fiscal deadlines proves less disruptive than the most recent set. We continue to expect the first increase in the fed funds target rate in 2016 Q1.

5. With the employment report, manufacturing data, and sentiment surveys in hand, we start our September CAI at 2.6%, down from 3.1% in August.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/V5t_f6eD1EM/story01.htm Tyler Durden

Yesterday Goldman explained why glorious and abysmal job numbers would both be sufficient to propel the Stalingrad and Poor to new ATH. So far, they were right. And while the number was not exactly abysmal (ironically, the market is now hung up on weaker than expected data just to make sure Uncle Ben and Uncle Janet stay around as long as possible), it was, as Goldman’s Jan Hatzius just announced, “somewhat weaker than expected, as the disappointment on September payroll growth was only partly offset by back-month revisions, while average hourly earnings grew more slowly than expected.” He said a bunch of other things too, but the most notable was that “this report makes it more likely that the Fed pushes the first reduction in the pace of its asset purchases into 2014… we think that March is the most likely date under our economic forecast.” And since it is now obvious that the Fed is completely oblivious to what ongoing QE does to high quality collateral (which it is now soaking up at a pace of 0.4% in 10Yr equivs per week), full steam ahead it is. We expect Dudley to get his Hatzius marching orders shortly.

From Goldman:

The unemployment rate ticked down, but benefitted from favorable rounding and a small decline in the participation rate on an unrounded basis. Although December remains a possibility, this report makes it more likely that the Fed pushes the first reduction in the pace of its asset purchases into 2014. While the uncertainty is considerable, we think that March is the most likely date under our economic forecast, and the assumption that the next set of fiscal deadlines proves less disruptive than the most recent set.

MAIN POINTS:

1. Payroll employment rose 148k in September (vs consensus 180k). While August employment growth was revised up?as has been the typical pattern in recent years?July employment growth was revised down, leaving the net revision to the prior two months only +9k. By industry, all of the slowdown in job growth relative to August was found in private service-providing industries, as employment in leisure and hospitality fell 13k (vs. +21k in August) and employment in health and education services rose only 14k (vs +61k in August). In contrast, construction employment rebounded (+20k), potentially due in part to more favorable weather in September, while government added 22k jobs, entirely due to the state and local sector. This morning’s report leaves the 3-month trend in payroll job growth at +143k and the 12-month trend at +185k.

2. The unemployment rate declined by one-tenth to 7.2% to one decimal place (vs consensus 7.3%). On an unrounded basis, the decline was a smaller four basis points to 7.235%. Although employment grew by 133k according to the household survey, on a payroll-consistent basis?adjusting for definitional differences between the two surveys?employment declined 195k. While the labor force participation rate held constant to one decimal place at 63.2%, on an unrounded basis the rate continued to edge down slightly.

3. Average hourly earnings grew only 0.1% in September (vs consensus +0.2%), leaving the 12-month rate of increase at 2.1%. The average hourly workweek was unchanged at 34.5. The index of aggregate weekly hours?the product of workers and hours per worker?grew at an only-modest 1.1% annual rate during Q3.

4. Although December remains a possibility, this report makes it more likely that the Fed pushes the first reduction in the pace of its asset purchases into 2014. While the uncertainty is considerable, we think that March is the most likely date under our economic forecast, and the assumption that the next set of fiscal deadlines proves less disruptive than the most recent set. We continue to expect the first increase in the fed funds target rate in 2016 Q1.

5. With the employment report, manufacturing data, and sentiment surveys in hand, we start our September CAI at 2.6%, down from 3.1% in August.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/V5t_f6eD1EM/story01.htm Tyler Durden

As part of our monthly NFP-day tradition, we break down the monthly job gains (and losses) by industry. So here they are: in September the biggest job gaining sectors, accounting for 86K jobs or 58% of the total 148K jobs added, were the following  four industries:

• Transportation and Warehousing: + 23K
• Government: +22K
• Retail Trade: +21K
• Temp Help: +20K

In short: nearly two thirds of all jobs created in September (according to the BLS’ increasingly more flawed data so these numbers are likely completely made up) were truck drivers, bureaucrats, salespeople and temps.

What about “real” jobs: well, Financial Activities were down 2K, Manufacturing were up 2K, Information (those very critical programmers so instrumental in the glitchless roll out of Obamacare): +4K, and Professional and Business Services (ex temps): +12K.

Quality all the way.

Source: BLS

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/o1ECAX_CUqE/story01.htm Tyler Durden

Just a few moar years of unlimited open-ended quantitative money printing and we are sure this will all be fixed…

 

 

via @Not_Jim_Cramer

 

Of course it does beg the question Rick Santelli asked…

"[What the Fed minutes said] is, listen, we have to wait for bigger confirmation that the economy is doing better; and for that, we're going to look at the employment side. [At the same time] we have the fewest people working that can work in 30 years, and all-time-record-high profits for corporations. Now, does that strategy sound rational to you?" It seems, now that Bernanke has seemingly promised that it will really never end, that Santelli's question will become increasingly critical in this country.

 

 

How does this end?

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/UJl6yFQrWmk/story01.htm Tyler Durden

The last time we caught the BLS systematically making up data, specifically as pertains to the NFP-parallel JOLTS survey, the result was truly epic: a one time adjustment in which the Bureau did everything it could to, in one month, plug the gap we had highlighted, resulting in the most skewed (and hilarious) data series we had every observed.

This time around, the BLS has once again outdone itself, focusing however not on the JOLTS survey, but on the one aspect of the labor force that has dominated public attention: the impact of Obamacare on the distribution of jobs by full-time vs part-time. As is well-known, and as we have been reporting for the past three or so years but becoming particularly acute in the last 3 months, virtually all job gains reported by the BLS had come in the ranks of the part-time workers, and to the detriment of full-time jobs. This resulted in substantial criticism of Obama, and the impact Obamacare has on jobs.

Well, some time in the past month and a half, the Obama administration called up the BLS and told them to remedy this.

Sure enough, while the September Establishment Survey was a disappointing +148K, far below expectations, it was the Household Survey where the fun was.On the top line, the gain in jobs was comparable to the Establishment number: a timid 133K.

However, looking at the breakdown between Full-Time and Part-Time jobs reveals something simply hilarious. The chart below summarizes it.

In brief: according to the BLS’ magic calculations, in one month, the month during which the so-called uncertainly surrounding the government shutdown hit its peak (if one listens to CEO apologists), the US work force saw the rotation of some 594K part-time workers into a whopping 691K full-time jobs, in addition to adding over 100K net new jobs in the month.

And like that, the mouths of all those who criticize Obamacare have been shit for good, all courtesy of Arima X 12 and a few goalseeked tweaks in Excel.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/MgNFHk0ShfI/story01.htm Tyler Durden

The 3rd miss in a row for private payrolls was enough to spark an engorgement of all things Federal-Reserve-liquidity related. Gold is jumping, Bond yields are tumbling, the USD is crumbling, and the S&P 500 is soaring to new all-time highs… sure, why not…

 

 

 

But but but the unemployment rate is at 5 year lows…. oh, we forgot, its irrelevant now that its “improving”… just as we always said it was when it was held up by any and all as ‘proof’ of the recovery

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/Ykl2sab35zY/story01.htm Tyler Durden

The 3rd miss in a row for private payrolls was enough to spark an engorgement of all things Federal-Reserve-liquidity related. Gold is jumping, Bond yields are tumbling, the USD is crumbling, and the S&P 500 is soaring to new all-time highs… sure, why not…

 

 

 

But but but the unemployment rate is at 5 year lows…. oh, we forgot, its irrelevant now that its “improving”… just as we always said it was when it was held up by any and all as ‘proof’ of the recovery

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/Ykl2sab35zY/story01.htm Tyler Durden

September jobs are a disappointment at 148K vs expectations of 180K and private jobs only 126K well below the 180K expected, but August was revised higher this time, from 169K to 193K. Net for the two months, largely a wash.

From the Household Survey:

The unemployment rate, at 7.2 percent, changed little in September but has declined by 0.4 percentage point since June. The number of unemployed persons, at 11.3 million, was also little changed over the month; however, unemployment has decreased by 522,000 since June.

Among the major worker groups, the unemployment rates for adult men (7.1 percent), adult women (6.2 percent), teenagers (21.4 percent), whites (6.3 percent), blacks (12.9 percent), and Hispanics (9.0 percent) showed little or no change in September. The jobless rate for Asians was 5.3 percent (not seasonally adjusted), little changed from a year earlier. 

In September, the number of long-term unemployed (those jobless for 27 weeks or more) was little changed at 4.1 million. These individuals accounted for 36.9 percent of the unemployed. The number of long-term unemployed has declined by 725,000 over the past year.

Both the civilian labor force participation rate, at 63.2 percent, and the employment-population ratio at 58.6 percent, were unchanged in September. Over the year, the labor force participation rate has declined by 0.4 percentage point, while the employment- population ratio has changed little.

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was unchanged at 7.9 million in September. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job.

And the establishment:

Total nonfarm payroll employment increased by 148,000 in September, with gains in construction, wholesale trade, and transportation and warehousing. Over the prior 12 months, employment growth averaged 185,000 per month.

 

Employment in construction rose by 20,000 in September, after showing little change over the prior 6 months.

The Labor Force Participation Rate was flat at 63.2%: the lowest in over 30 years.

 

3rd monthly miss in a row for Private Payrolls…

 

as the unemployment rate drops to Nover 2008 lows…

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/67zjpfrZPNs/story01.htm Tyler Durden

Many thought Goldman was joking when, in its preview of today’s delayed September NFP, it essentially said the number doesn’t matter – it will be bullish no matter what (a +1 million print will be bearish as it means 2 million have to reenter the workforce now that the labor participation rate is an issue, as opposed to 2010 when it was only mentioned on Zero Hedge; a -1 million print will mean taper in 2099; both numbers will be spun as better than in reality due to the government shutdown that did not even take place in the month of September) as it means more Fed, more of the time. Sadly, in central-planning that pretty much covers it up. For everyone wanting some more info on what to expect in under half an hour, here is the full breakdown from RanSquawk.

September US Non-Farm Payrolls

• US Change in Nonfarm Payrolls (Sep) M/M Exp. 180k, Low 100k, High 256k (Prev. 169k, Jul 104k)
• US Unemployment Rate (Sep) M/M Exp. 7.3%, Low 7.1%, High 7.4% (Prev. 7.3%, Jul 7.4%)

“Safety in Numbers” estimates by bank:

• Deutsche Bank 170k
• Bank of America 170k
• HSBC 171k
• Citigroup 180k
• UBS 195k
• JP Morgan 195k
• Barclays 200k
• Goldman Sachs 200k

The September nonfarm payrolls report will be released today, eleven days later than originally scheduled, after a bipartisan agreement was reached to reopen the US government.

The release, as has become the norm, will be used to gauge when the Fed will begin to reduce its QE3 programme. However, amid the fiscal dysfunction on Capitol Hill, several FOMC members noted that delays to key macroeconomic data due to the shutdown may prevent the Fed from making informed changes to its policy measures. Furthermore, a very similar budgetary stand-off in the US may well be seen in the new year, with last week’s deal being just a temporary measure to fund the government until mid-January. As a result, many analysts have pushed back their forecasts for a reduction in Fed bond-buying.

Last month, 169k jobs were added, lower than the expected 180k and the previous month was given a large downward revision. The unemployment rate declined to 7.3% from 7.4% in July; however, this was attributed to a decline in the labour force participation rate.

The September ADP employment reading, which is calculated using a very similar methodology to nonfarm payrolls, came in at 166k, missing the median expectation of 180k, with the previous reading also seeing a significant downward revision. As has been seen in many of this year’s NFP readings, the ADP release suggested that US labour market activity is continuing to soften. US government austerity measures prior to the shutdown, as well as the recent rise in rates, appear to have dampened the recovery. It may also have been hampered by investor concern over the approaching budgetary gridlock that had been on the horizon for many months.

Market Reaction

As mentioned, many participants believe the Fed will be reluctant to reduce QE given the uncertainty over both the economic effects of the shutdown and the outcome when the temporary deal lapses. If that is the case, a reasonably strong reading could boost sentiment, lifting stocks and weighing on bonds in a knee-jerk reaction. But with stocks at near-all-time highs, there may be little scope for further upside. Conversely, a very strong number, significantly above the majority of expectations, has the potential to induce forecasts for a QE reduction. If so, considerable downside risks would be posed to fixed income. However, a very large beat on expectations would be required for the US 10-year yield to reach the 2.75% level seen during last week’s Washington turmoil.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/aOolihR7lWI/story01.htm Tyler Durden