More layoffs: ADP and Challenger Gray & Christmas reports are in
Plenty of job news is in this morning, starting with the Challenger Gray & Christmas layoff data. The firm announced that layoffs from major U.S. corporations increased by 31 percent in July to 97,373. This increase is the first since January, indicating that corporate layoffs are picking up after hitting a 15-month low in June. During the first seven months of the year, 994,048 workers have been laid off -- which is 72 percent higher than the same time last year.
So, how is that market rally coming? In this backwards economic climate, this report could be the impetus for a market rally; but it shows that the job picture is worse this year than it was at the same time last year -- when our economic situation was much worse, right?This news is compounded by the U.S. ADP jobs report, indicating that the employment index dropped by 371,000. Of course, this is great news -- since it is the smallest decline since October. The report showed that the goods-producing sector lost 169,000 jobs and the service sector lost 202,000. This report is often seen as a preview of the non-farm payroll data, which is set to be released on Friday morning. Expectations call for the report to show the lowest job losses since August.
That's a lot of jobs lost in the last month, yet the economy will see this as good news -- because it wasn't as bad as expected. That said, let's remember that data show there are more unemployed people now than a year ago, and this fact will eventually hit the economy where it matters, in the pocketbook. We are playing a dangerous game when we celebrate news that, while not as bad as expected, is still bad. I have cautioned this before with company earnings; and we are now seeing it happen with the economy as a whole. Bad news is bad news, and I don't think I am being a grumpy middle-aged man when I point out that the silver lining in these clouds will tarnish and impact the broader economy.
I'm not asking for everyone to be bearish about the economy, I am asking people to be realistic. Job losses are job losses, bad news is bad news. Will the economy get better? Eventually, the big question is when. It is going to take some time, and I don't think celebrating not-as-bad-as-expected news is the best way to help the economy recover. Of course, this opinion won't matter on Friday when investors celebrate the fact that only 225,000 people lost their jobs rather than 350,000.