And maybe only 'drinking place' workers after the big US jobs report...
IT IS IMPORTANT to distinguish the 'back end' from the 'front end' of the economy, writes Gary Tanashian in his Notes from the Rabbit Hole.
Or else, all you end up with is hype emanating from the financial sphere every time an economic data release comes out.
For example, I was critical of Martin Armstrong's post, "Is the recession starting?" in a rebuttal post, "Armstrong 3+ Decades Late on Manufacturing", because Marty's post not only brought back some jaw droppingly old-fashioned concepts about US manufacturing (just-in-time and automation replacing labor) but it focused only on the 'front end' of the economy, affirming it in a short info-blurb.
Notes from the Rabbit Hole caught the downturn in manufacturing ahead of time (July) and also has been on the sharp deceleration in Semiconductor bookings and billings (a two-month trend now). But these Canaries in the Economic Coal Mine are just front-end clues. Meanwhile, as we have been noting for months, the back end – with a strong US Dollar behind it – has been doing just fine.
Before proceeding to last week's Non-Farm Payrolls report, let's shoehorn in a little extra data from the manufacturing sector. Machine Tool unit sales were very bad for most of 2015. In November a little upturn happened. Call it a foothill to a would-be mountain that, like clockwork, happens in December. So, economic bears, do not fret if it comes about. It is simply would-be buyers waiting until the last minute before deploying capital expenditure for 'tax incentive' purposes.
The Machine Tool sales data had better bump in December or else things would be indicated to be going the way of, well – just ask the miners and energy extractors circa 2014.
Back on message, from the BLS release, here is really all you need to know about the latest US jobs report.
Total nonfarm payroll employment increased by 292,000 in December. Employment rose in several industries, including professional and business services, construction, health care, and food services and drinking places. Mining employment continued to decline. In 2015, payroll employment growth totaled 2.7 million, compared with 3.1 million in 2014.
The economy continues to service itself quite nicely. I really hope FloatingPath will get itself back up and rolling because I miss Nick's handy employment graphics, which we had shown for many consecutive months in NFTRH to have been in unbroken trends. That would be services (in which I include construction, as it is a product of the service economy) up and manufacturing and mining flat or down.
If however, the Canaries in the Coal Mine work again, extending their status as early economic indicators by reversing their bullish signal of late 2012/early 2013, then the clock is ticking for most employer categories but perhaps "drinking places".
With a dawning bear phase in the markets, bars should hold up just fine.