Companies Cutting Hours Aggressively

Friday, May 16, 2008 | 06:27 AM

I have over the years discussed what a poor economic recovery this cycle has been in terms of job creation. Given the lack of robust job creation, its not a huge surprise that layoffs typical of most recessions have yet to appear.

Merrill Lynch's David Rosenberg notes it has become "economic myth" that the April employment report was benign. In particular, he notes that hours worked, one of the employment metrics reported by the BLS, is rapidly declining. In the April NFP release, hours worked plunged:

"Companies did not cut as many positions as expected, they cut the hours instead.  The average work week plunged 0.3% (and, aggregate hours worked were down at an annual rate of 1% in the past three months), which, by the way, would be the equivalent of 400,000 job cuts.

This is a sign that labor market conditions and domestic demand are far softer than the headline suggests. What drives consumer spending inevitably is income growth. Average weekly earnings fell 0.2% sequentially in April in what was the largest decline in two years. This dragged the year-on-year rate down to 3.1% from 3.3% in March, 3.7% in February and the nearby peak of 3.8% posted last November in what is clear disinflationary trend in wages. 

The rebound in the Household survey was all in part-time employment. While there was a nice rebound in the Household Survey, it was all in part-time employment – that is not the driver of confidence and spending. Growth in full-time jobs is what drives those things.  And, full-time employment actually fell 375,000 in April and is down 572,000 year-to-date; of the folks who were working part-time in April, the number doing so because of “economic reasons” (mostly slack business conditions) surged 306,000 or 6.3% – again the steepest runup in two years.  The diffusion indices fell through the floor to 45.4 in April from 48 in March – this measures the share of industries adding to payrolls and shows that even though the headline job loss was lower than expected, the decline was very broadly based across sectors.   (emphasis added)

In case you missed the underlined text, employers cut back so many hours that it was the functional "equivalent of 400,000 job cuts."

This is not the sort of data you associate with economic recoveries.


>

Source:
Macro viewpoint: Debunking five myths
David A. Rosenberg, North American Economist
Merrill Lynch,  09 May 2008
http://tinyurl.com/6kjlhl

Previously:
Job Creation: Post-Recession Recovery Cycles   April 05, 2008  http://bigpicture.typepad.com/comments/2008/04/job-creation-po.html

Friday, May 16, 2008 | 06:27 AM | Permalink | Comments (34) | TrackBack (1)
de.li.cious add to de.li.cious | digg digg this! | technorati add to technorati | email email this post

bn-image

TrackBack

TrackBack URL for this entry:
http://www.typepad.com/services/trackback/6a00d8341c52a953ef00e5522a4d828833

Listed below are links to weblogs that reference Companies Cutting Hours Aggressively:

» BizLinks and Open Comments | 5.16.08 from Loren Steffy
No ships coming to new Port of Houston cruise terminal -- a bruising from no cruising. FAA Probes American's Inspections ($) Team Icahn: Who's Running for Yahoo's Board Companies Cutting Hours Aggressively Bernanke: Banks Must Foresee Risk Candidate f... [Read More]

Tracked on May 16, 2008 9:36:18 AM

Comments

At this rate, pretty soon we'll be working as many hours as the French.

Posted by: VennData | May 16, 2008 6:41:13 AM

The comments to this entry are closed.



Recent Posts

December 2008
Sun Mon Tue Wed Thu Fri Sat
  1 2 3 4 5 6
7 8 9 10 11 12 13
14 15 16 17 18 19 20
21 22 23 24 25 26 27
28 29 30 31      

Archives

Complete Archives List

Blogroll

Blogroll

Category Cloud

On the Nightstand

On the Nightstand

 Subscribe in a reader

Get The Big Picture!
Enter your email address:


Read our privacy policy

Essays & Effluvia

The Apprenticed Investor

Apprenticed Investor

About Me

About Me
email me

Favorite Posts

Tools and Feeds

AddThis Social Bookmark Button

Add to Google Reader or Homepage

Subscribe to The Big Picture

Powered by FeedBurner

Add to Technorati Favorites

FeedBurner


My Wishlist

Worth Perusing

Worth Perusing

mp3s Spinning

MP3s Spinning

My Photo

Disclaimer

Disclaimer

Odds & Ends

Site by Moxie Design Studios™

FeedBurner