On The Margin: Total Unemployment May 2011

Today’s Employment Situation report showed that in April “total unemployment” including all marginally attached workers stayed nearly unchanged at 15.8% from the prior month's level of 15.9% while the traditionally reported unemployment rate rose to 9.1%.

The traditional unemployment rate is calculated from the monthly household survey results using a fairly explicit definition of “unemployed” (essentially unemployed and currently looking for full time employment) leaving many workers to be considered effectively “on the margin” either employed in part time work when full time is preferred or simply unemployed and no longer looking for work.

The Bureau of Labor Statistics considers “marginally attached” workers (including discouraged workers) and persons who have settled for part time employment to be “underutilized” labor.

The broadest view of unemployment would include both traditionally unemployed workers and all other underutilized workers.

To calculate the “total” rate of unemployment we would simply use this larger group rather than the smaller and more restrictive “unemployed” group used in the traditional unemployment rate calculation.

Extended Unemployment: Initial, Continued and Extended Unemployment Claims June 02 2011

Today’s jobless claims report showed an slight decline to both initial and continued unemployment claims as a rising trend continued to materialize for initial claims.

Seasonally adjusted “initial” unemployment declined by 6,000 to 422,000 claims from last week’s revised 428,000 claims while seasonally adjusted “continued” claims declined by 1,000 resulting in an “insured” unemployment rate of 3.0%.

Since the middle of 2008 though, two federal government sponsored “extended” unemployment benefit programs (the “extended benefits” and “EUC 2008” from recent legislation) have been picking up claimants that have fallen off of the traditional unemployment benefits rolls.

Currently there are some 4.04 million people receiving federal “extended” unemployment benefits.

Taken together with the latest 3.54 million people that are currently counted as receiving traditional continued unemployment benefits, there are 7.58 million people on state and federal unemployment rolls.

ISM Manufacturing Report on Business: May 2011

Today, the Institute for Supply Management released their latest Report on Business for the manufacturing sector indicating that economic activity continued to expand in May though at a sharply slower pace than in April and suggested that all measures saw a slowdown.

At 53.5 the purchasing manager’s composite index (PMI) declined a whopping 11.42% since April and declined 7.44% below the level seen a year earlier.

Some respondents indicated increasing pressure on prices as higher energy prices stocked inflationary forces as well as poor results coming from bad weather:

"Chemical prices are under increasing cost pressure, driven by feedstock and transportation costs." (Chemical Products)

"Demand remains strong; however, inflation is evident everywhere in virtually every material purchased." (Paper Products)

"Bad weather is impacting retail business." (Printing & Related Support Activities)

"Business is still strong, but we are more aware of a possible softening than previously." (Machinery)