For Immediate Release
Chicago, IL – January 11, 2010 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Manpower (MAN), Kelly Services (KELYA), Ford (F), Toyota (TM) and Charles Schwab Corp. (SCHW).
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Here are highlights from Friday’s Analyst Blog:
Employment Numbers Disappoint
The employment report for December came in weaker than expected with 85,000 jobs lost, versus consensus expectations of a loss of 35,000 jobs. It is worth noting, however, that the consensus expectations had been moving down over the course of the week, especially in reaction to the ADP numbers, which proved to be very accurate this month.
The unemployment rate remained at 10.0%, but that was a function of a declining participation rate. The underemployment rate (U-6) ticked up to 17.3% from 17.2% in November, but is still below the 17.4% peak in October.
There were a few silver linings to the report, but one does have to dig fairly deep to find them. Chief among these was that the number of temporary jobs increased by 47,000 in the month, continuing the recent rebound. Since July ’09, 166,000 temporary jobs have been added.
Why is this important? It is not because temp jobs are better than other sorts of jobs, but because they are a leading indicator of overall employment. When business first starts to pick up, rather than going out and hiring someone full time and permanently, many businesses will first call Manpower (MAN) or Kelly Services (KELYA). Only when businesses get more confident that the upturn is sustainable will they then bring on permanent new employees.
Unemployment: Sectors & Demographics
Construction was particularly hard hit again, with a loss of 53,000 jobs. Construction employment peaked earlier than did total employment, in January 2007, at 7.737 million jobs; now construction employment is down to 5.907, a decline of 1.83 million, or 23.7% from the peak. The last time that construction employment was this low was in November of 1997.
Manufacturing, the other big part of the goods producing sector, lost 27,000 more jobs in December. Manufacturing employment never really increased during the last economic expansion, so it is hard to get a good starting point for its decline. Since the overall peak in employment in December 2007, though, we have lost a total of 2.147 million factory jobs, or 15.6% off the 12/07 level. The last time we had anything that looked like a peak in manufacturing employment was back in August of 1998, when there were 17.563 million factory jobs, but even that was a pretty feeble peak. The true historic peak in factory employment came all the way back in June of 1979, more than 30 years ago, at 19.509 million jobs.
The first graph (blue) shows the history of construction and manufacturing employment since 1950, along with total private sector employment (right scale, green line). Clearly manufacturing has been hurting, at least in terms of employment, for a long time now. Total manufacturing output, though, has continued to increase over the years as it has been generally easier to automate factories than other parts of the economy.
Ford (F) and General Motors may have lost market share to Toyota (TM). They are, however, making almost the same number of cars and trucks as they were back in 1982. The UAW, on the other hand, is only a small fraction of the size it was back then. Automation has probably resulted in more jobs lost in manufacturing than has outsourcing to China and the rest of the developing world, although clearly both forces have been at work behind the long-term secular decline in U.S. factory jobs.
Schwab to Slash Trading Fees
In an effort to grab more investments from customers, Charles Schwab Corp. (SCHW) said on Thursday that it will cut trading fees 31% to a flat $8.95 for its smaller clients starting Jan 19, 2010.
The new fees will be applicable to Schwab’s investors with accounts of less than $1 million and who execute fewer than 120 trades in a year. Previously, these smaller investors had paid $12.95 per trade plus charges for trades larger than 1,000 shares. The change in trading fees could reduce Schwab’s first-quarter revenue by $15 million to $20 million.
However, there will be a surcharge of $5 for automated phone trades and $25 for broker-assisted trades. Schwab has already waived the minimum fees required for accounts and reduced expenses on certain mutual funds. The fee waiver is expected to cost the company more than $100 million in revenue in the fourth quarter. Schwab expects fourth-quarter earnings to be hurt by a slowdown in trading volumes.
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