Today is the first Friday of month and that means one thing…monthly employment numbers are released at 8:30am est. Employment is one of the statistics we track closely here at Ropay Asset Investors because the unemployment rate and charge-offs are closely correlated.
According to the May report, employers added the fewest jobs in 8 months. The 54,000 jobs added is down sharply from the April revised number of 232,000. A key point to keep in mind is that the economy needs to add about 125,000 jobs each and every month in order to keep up with our growing population. For 2011 as a whole, we are averaging about 157,00 new jobs per months which is a sign that the unemployment rate will not be dropping to pre-recession levels anytime soon.
If you take a look at the graph courtesy of the Bureau of Labor Statistics, you can see that unemployment has been rising steadily since 2008, peaked at a little over 10% in 2009, and is hovering near the highs with a jump in May to of 9.1 %.
Keep in mind the broader measure of unemployment that takes into account part-time workers who would like full time positions and people who have given up looking for jobs is 15.8%
If something seems to good to be true it probably is. The strong gains in the previous months do not match up with the recent string of poor economic readings, such as the recent dramatic drop in the Institute For Supply Management’s PMI from 60.4 to 53.5.
P.S. McDonald’s hired 60,000 new employee’s in May. Without those new hires the number would have been negative!
These indicators bode well for a continued supply of fresh charged-off credit card debt.
As always, Do Good and Make Money!