Mass Layoffs Jan 2010

1 03 2010

Sorry I have been a little short on blogs the last few weeks…

The US Department of Labor – Bureau of Statistics released the January Mass Layoff Events data for January.  I have been watching the Mass Layoff events for a while now for a couple of reasons, but primarily as a leading indicator of the economy.  I spoke last year a great deal how the number had exceeded 2000 events for 12 straight months and how this was most likely a sign of a protracted recovery period.   The January number was 1,761 which was roughly the same for the last three months.  While the move under 2,000 was at least a step in the right direction it appears as if we continue at an elevated rate.

Job creation is one of the primary keys to economic recovery and it seems as if we are still shedding above normal levels of jobs.   Continuing at 1,700+ events (which in Jan actually meant 180,000 claimants – or an annualized number of over 2 mil initial claimants.  The point is that I feel the economic climate is still contracting, though perhaps at now slower rates.

From a street level assessment I am starting to hear of more projects starting, consulting firms seems to be a little more optimistic outlook for the year, and less people concerned about their current state.

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Mass Layoffs Nov 2009

23 12 2009

Yesterday, the Department of Labor Bureau of Labor Statistics released the November Mass Layoff Report.  The news was upbeat in that the trend continues to get better (meaning fewer mass layoff events) with only 1,797 events.  We have spoken about 2,000 events as being extremely high and November was the first time in the last 14 months that the number dropped below 2,000.  The bad news is this is still higher than 80% of the monthly numbers since 1999 so the numbers are again not positive, just less negative.

One bit of interesting news is that the number of layoffs (officially claimants) per event was at one of its lowest levels since the beginning of 1999.  This means that while the number of layoff events is still high, there were fewer claimants per event (fewer people laid off or more found something else), or that instead of 200,000 claimants, we saw only 165,346.  This number is a healthier indicator than the number of events (see the dotted red lines in the chart below and compare the crimson line and the blue line from the chart above).





Danger of Leading Indicators

22 12 2009

UPDATED 12-23, 2009:  Boston.com story about home sales – seems like we have stories with divergent viewpoints.  Good example of how a single version of the truth depends upon the story teller…

CNN Opening Paragraph: NEW YORK (CNNMoney.com) — After surging 10% in October, sales of existing homes jumped again in November, growing 7.4% compared with October to an annualized rate of 6.54 million units, according to the National Association of Realtors. (full article)

Boston Globe Opening Paragraph: WASHINGTON—Sales of new homes plunged unexpectedly last month to the lowest level since April, a sign the housing market recovery will be rocky and heavily dependent on the generosity of Uncle Sam. (full article)

Read each…Ahh, the politics of spin, or is it the spin of politics of spin.

November saw a healthy jump in home sales.  The good news is that home sales and housing starts are usually very good leading indicators about the health of the economy.  Yet the bad news, in this case we have a potentially baked number.   The market is being artificially inflated with both lower interest rates and a government subsidy for first time home buyers.  What makes this worse is we have created a situation where we know less – we know a number improved, but we have no understanding if the economy is better.

CNN Story on November Home Sales

This is one of the fears about designing the right KPIs.  We want to find the perfect KPI, or create a list that tries to include everything.  What we need are a few KEY indicators to trigger the right conversations about what actions (business levers to pull) to take or not take.   We also need to discuss performance and action in a holistic manner and not get caught in panic mode because one indicator seems to be below expectation.  We also do not want to trigger an action to artificially improve a number.

For example…Days Sales Outstanding (DSO) can be used as a measure of customer satisfaction.  The interpretation is that people pay the bills of the people they like first.  If you are able to shrink the number, then you at least have an indication that customers are generally happier than they were last month.  If the Marketing VP were compensated on Customer Satisfaction and we used DSO, the VP might change the payment terms.  While we might see improvement in DSO, we are probably not seeing an improvement in Customer Satisfaction, which was the goal when we started.

As you are designing KPIs:

  • Start with your high level annual goals for the year
  • Build out a system to discuss the implications (don’t just look at the number)
  • Assign someone to write up the implications on a regular basis
  • Create a commonly understood definition of the KPI, and document it where it can be easily accessed




Mass Layoff Events October 2009

20 11 2009

Today the US Department of Labor – Bureau of Labor Statistics reported the October Mass Layoff Events (here are the Sept and Aug blogs).  We have watched this since late last year when the number of events crossed the 2,000 mark.  This marks our 14 month in a row where we have exceeded that level.  While this is still an alarming rate of Layoff Events at least we can say that the trend could be moving in the direction of dropping below the 2,000 next month.

I still have concerns about the state of the US Economy as we approach the end of the year.  If I were to guess, I think we will see this number drop below 2,000 for November, but return to greater than 2,000 in December and/or January.





Producer Price Index October 2009

18 11 2009

Yesterday’s Bureau of Labor Statistics (BLS) release of the Produce Price Index (PPI) saw prices moving north again, this time a .3% gain compared to last months .6% loss.  The numbers seem to be stabilizing (one month a little up, on month a little down).  Looking into a little more depth we see that Energy and Food are the primary drivers.

If you are looking for more information relevant to your industry – check out www.bls.gov/ppi/.  They break out the information a number of different ways.

 

 





Employment Situation Oct 2009

6 11 2009

The employment situation continues to demonstrate the frailty of the current economic climate.  In Sept the unemployment rate was 9.8%, Friday it was announced that Oct witnessed this number increase to 10.2%.  “This is the highest rate since April 1983.”  We are also at the second highest point (and growing) in the history of tracking the data – 1948.

(Here is the link to the commissioner’s report to Congress and the original report)

Employment Situation Oct 2009

If we look at a visual of the informtion, a number of things jump out at least to me:

1.  The Good, it looks like (at least to me) the higher the number, or the swifter the increase, the quicker the the unemployment rate drops.  There appears to be a natural slope (green line – A) to the decline in the the unemployment rate after a spike, which then is followed by a less gradual slope that marks a return to a healthy market (red line – B).  In roughly 1975 and again in 1983 we saw two spikes which then followed the green line’s slope – except in the case of 1983, we actually saw that trend bear out over the longer term, yet moved faster during the initial recovery period (reb box).

2. The Bad – if this follows the trend pattern of 1983 we may be looking at another 7-8 year recovery process to return the unemployment rate to around 6% which roughly appears to be natural healthy level.

3. The Ugly – We have yet to see the peak of this trend.  And even if this does turn around in the next month or two, we are so bad a shape across so many other sectors it may take far longer for us to return to a 6% unemployment rate.  If we continue to see credit tighten up at the rate it is going, we will see continued pressure on unemployment.





Price of Oil

27 10 2009

One of the biggest impacts to the US economy is the cost of oil.  We are still the leading consumers, though our lead is being taken over by China.  It is no surprise that the price of oil/gas can either fuel US economic growth, or bring it to a crawl.  I remember (somewhat fuzzy) as a kid waiting in line for gas, and I sold my Ford Expedition in fear that gas was going to see $5/gallon last year. While perhaps I sold the car a little prematurely, the basic fundamental truth about the control of the price of oil is well beyond me. And in someways beyond any of us.

OPEC mostly gets away with what it wants in terms of prices, and China is clearly working to leverage its relations with OPEC countries to improve its position.  While this isn’t necessarily bad for the US, we do lose some of our bargaining power.  And as China continues to increase demand, it drives up market prices.

I am going to try to add the Price of Oil to the Baumohl Indicator series on a bi-weekly basis.  My goal is to continue to explore some of the indicators of US Economic Performance and how they impact business cycles.