It is unwise to look too deeply into the movement from month-to-month in the Employment Situation. Seasonality and revisions can easily distort your view. As a consequence, we look for evidence in a handful of sub-series in changes of trend, and deviation from the prevailing trend in headline establishment numbers.In order to capture change in winds, we put economic data releases in the context of previous turning points. Our first example is the headline unemployment rate:
The unemployment rate into recessions begins to accelerate on average. Let’s next examine the headline establishment payroll data. To normalise it across business cycles, we’ve plotted the path of the total number of payrolls, subtracting the prior 12-month average:
This is a fairly unconvincing chart either way. Present headline job-growth remains higher than the average into all recessions.The second major measure of the total stock of jobs in the country is the household survey. The two have diverged somewhat substantially in the past year. The household survey is showing much higher job growth. Here is the progression, but measured via the household survey:
This is a much stronger showing, though still troubling from the past 4-months in.The headline numbers are important, but really represent a coincident view into the economy. There are, in fact, a number of sub-series in this release which lead both broader payroll growth, as well as economic activity. Our favourites include Temporary Professional & Business Service payrolls:
This is unambiguously strong.Another favourite is overtime hours: Job losers on layoff as a % of total unemployed: Perhaps more obscure, and small sample, but interesting & relevant given the present recession originated in the credit markets, Credit Intermediation Payrolls: The conclusions the data points to point to some growth, but are rather ambiguous as to how much. Despite the weak data, a recession in the next 1 or 2 quarters seems very unlikely.