In Perspective

That’s how we need to view the recent data on the economy, most notably the positive jobs report for October. Yes, data from the Bureau of Labor Statistics (BLS) reveals progress on the job front—certainly a move in the right direction. Total nonfarm employment rose 151,000 in October, with the private sector adding 159,000—its best showing since April. So far this year, the private nonfarm sector has boosted payrolls by more than 1.1 million. This is definitely better than the steep job losses recorded during the recession, but not nearly enough to put a dent in unemployment. The jobless rate (calculated from a different survey) remained at 9.6% in October, and has been above 9.0% since April of last year. And note, conditions are even weaker than these data suggest. If the civilian labor force participation rate (labor force as a percent of working age population) had remained at 2007 levels, the unemployment rate for October would be standing at 11.8%. It is not coincidence that the Nobel Prize for economics was awarded to three individuals for their study of markets with search frictions. The Nobel committee cited the work done by Peter A. Diamond of MIT, Dale T. Mortensen of Northwestern, and Christopher A. Pissarides of the London School of Economics for its application to the labor market. While their work may help shed some light on why aspects of the labor market are behaving the way they are, it’s not going to miraculously produce jobs.

Data on income, retail sales, manufacturing, the service sector are all looking better—even sentiment among small businesses reported by the NFIB ticked up—but let’s not break out in a chorus of “Happy Days Are Here Again” just yet. The business environment remains in a state of heightened uncertainty, and regardless of one’s view of the recent mid-term elections don’t look for immediate clarity. Furthermore, whatever the pros and cons, the ongoing debate over the Federal Reserve’s current program to purchase over $600 billion in Treasuries—quantitative easing (QE2)—is adding to the uncertainty.

As for print, employment continues to decline, although at a more moderate pace. This is not surprising given that the industry’s recovery is lagging that of the overall economy. Total employment in the industry is down 6.3% this year during the first 10 months, about half the 11.8% decline during a similar period in 2009. But unlike the overall economy, declining employment in the printing industry is not a recent development. It has been taking place for some time now. In other words: The industry’s employment decline contains a significant structural element—a structural element that’s quite present in the industry’s overall results. As discussed in NAPL’s Printing Business Conditions: October 2010, don’t bank on the economic recovery making everything right again. For the most part, future success in the industry is going to be rooted in specific company initiatives.

Andrew Paparozzi                Joseph Vincenzino                Kong Lue Wang