By Nin-Hai Tseng
September 13, 2010

The past two weeks have delivered some good news on the unemployment front. But the devil is in the details, and the details suggest that no hiring frenzy is imminent.

With the U.S. jobless rate at an unnervingly high 9.6%, the unemployment statistics released by the Labor Department have never been more closely watched as an economic indicator.

These statistics get most people – even some Wall Street bank analysts – pretty riled up. One month they’re disappointed when the monthly jobless rate rises. The next they all let out a sigh of relief when it drops. Last week, when weekly initial claims for unemployment benefits fell to its lowest since July, it eased worries of the economy possibly slipping back into a recession.

And when the Labor Department announced the private sector added 67,000 jobs in August, the market celebrated, despite the fact that the jobless rate actually rose to 9.6% from 9.5%.

In the grand scheme of things, these statistics are important but they only partly capture what’s really going on in the job market.

Fortune lists three signs proving we’re still in a jobless rut.

Average workweek is still short. During the recession, many employers cut hours. And those hesitant to take on workers full-time hired part-timers. Until we see the average workweek in the private sector rise, there isn’t much reason to believe that there’s sustained job growth. After all, employers will use their existing workers for the maximum hours they can work before hiring new people.

Take, for instance, the Labor Department’s latest jobs report: The average workweek for all employees in the private sector remained unchanged in August from July at 34.2 hours. So even though the private sector added 67,000 jobs last month, there are signs that it’s still very much a jobless recovery.

Unemployment claims and the magic number. Each Thursday, the Labor Department releases a tally of the newly jobless applying for aid. As with any statistic that captures data over such a short period, virtually anything from bad weather to holidays could impact the tally. So whether initial unemployment claims go up or down week-to-week doesn’t matter as much as the tally itself.

The rule of thumb that most economists go by is this: Unemployment claims must fall to about 425,000 or lower for several weeks before there’s any real hiring going on. So while some observers cheered last week when claims fell to its lowest levels in months, the tally was still at 451,000 — still too high to really celebrate.

Corporate cash balances remain high. When companies are sitting cash at record levels, that means they’re either saving for some kind of strategic investment or simply not hiring. In today’s case, most companies have held off on hiring amid uncertainty of the economy. Non-financial companies in the S&P 500 reported $837 billion in cash at end of March, a 26% increase over the previous year’s $665 billion. This means companies are holding cash reflecting 10% of their value, an unusually high level as companies on average have held cash equal to 6.6% of their value since 1999. S&P later this week is expected to announce a seventh consecutive quarter of record cash levels.

See also:

Jobless claims slide to a nearly 2-month low

Do unemployment checks keep the jobless at home?

OECD calls recession ‘unlikely

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