Some Good Employment News at Last

The month of April has brought us three reports that indicate that growth in employment may finally have returned to the US in March. On April 2, the BLS released “The Employment Situation” for March and the first piece of good news was that nonfarm payroll employment rose by 162,000 jobs in March. This was the first statistically significant increase in this closely watched measure since December 2007, when the recession began. There were small increases in November 2009 and January 2010, but the net change has to be larger than 108,000 jobs to be statistically significant.

The second bit of good news was that the total number of people employed rose by 264,000 in March after an increase of 308,000 in February. We had not seen two consecutive months of growth in this measure, which directly influences the unemployment rate, since October and November 2007, just before the recession began. The unemployment rate held at 9.7 percent for the third straight month. That’s not wonderful news, but it sure beats continuing increases.

On April 6, the BLS released the JOLTS report for February. That report said there were 2.7 million job openings on the last business day of February.

For the first time, the BLS released a very interesting group of graphs with analytical information with that report. These showed that the number of job openings hit its recent peak of 4.8 million in March 2007, well before the recession started. It fell to 2.3 million openings in July 2009. Since then it has gradually moved up to 2.7 million.

The JOLTS report also showed that in February, for the first time since the recession began, the number of new hires was equal to the number of job separations. Both totaled 4.0 million in February.

For the twelve months ended in February 2010, there were 48.3 million people hired and 51.5 million people separated. That’s a net employment loss of 3.2 million, which is 2.2 million better than where we were in December 2009.

On April 16, the BLS released the state employment data for March. Following the good news from the national report, this release showed that 33 states and the District of Columbia had a seasonally adjusted increase in nonfarm payroll employment in March as compared to February. Three states (Alaska, New Hampshire and North Dakota) and the District of Columbia had increases from March 2009.

Only Alaska, North Dakota and the District of Columbia posted increases in nonfarm payroll employment since the recession began. Nevada has lost 13.7 percent of its jobs since then, followed by Arizona (-10.7 percent), Michigan (-9.9 percent), Florida (-9.7 percent), California (-8.8 percent), Oregon (-8.8 percent), Georgia (-8.3 percent) and Idaho (-8.1 percent).

In terms of total employment, only Texas (1.4 percent) and Alaska (0.1 percent) have shown increases since the recession began. That should change dramatically over the course of 2010.

The “Great American Jobs Machine” Is Still Running

If you really want to know what is going on with employment in the US, you must go beyond “The Employment Situation” that the BLS releases early every month and which gets huge media coverage. (The next update is February 5 covering January and big downward revisions to 2008 and 2009 data.) The more detailed insights come on the second Tuesday of every month in the JOLTS (Job Openings and Labor Turnover) reports. Click here to read the full post and comment (Insights subscribers) »

At Last, Much Better Employment Data

If you’re going to get a huge “upside surprise” only occasionally, it’s great to get it on what is at least politically the most important economic variable, mainly jobs. The BLS did just that for us yesterday when they reported that the drop in nonfarm payroll employment was 11,000 jobs. That was far below the consensus expectation of a loss of 125,000 such jobs. Click here to read the full post and comment (Insights subscribers) »

Update to the Outlook

This piece was written for a customer who deemed it too long for his use. So, since I hate to waste 2000 words–enjoy! Regular readers will note that there is some repetition here for you, but that’s because you’ve already learned this stuff while new clients haven’t.

It’s a hard cruel world out there with much economic turmoil and concern. Since August 9, 2007, the day that the huge French bank BNP Paribas (one of the 10 largest in the world with assets in excess of $1.3 trillion) told owners of shares in three of its mutual funds they could not redeem them “because we own bonds based on U.S. subprime mortgages that we can’t put a value on right now,” financial panic has spread around the world.

Nothing makes an investor madder or more scared than being unable to cash out his or her investment from a fund. This problem has recurred many times throughout history. A comprehensive documentation that is also a most delightful and interesting book to read is Manias, Panics, and Crashes: A History of Financial Crises (5th Edition) by Charles P. Kindleberger and Robert Aliber (ISBN 978-0-471-46714-4). This wonderful book, which has always been a huge hit with my MBA students in the several second-year elective courses when I’ve used it, covers the history of financial panics around the world from Kipper-und-Wipperzeit of 1619-1622 and the Dutch tulip bulb episode in 1636-1637 through the Asian collapse in 1997 as well as the Russian default and the collapse of Long Term Capital Management in 1998 and the corporate scandals of 2001-2003 (Enron, Worldcom and so on).

The Wall Street Journal had a lead editorial on September 16, 2008 (“Surviving the Panic”) referring to the usefulness of this book in understanding the current situation. You’ll feel better if you get a copy of the book and peruse it carefully.

Few people were sorry to see 2008 pass into history at the stroke of midnight on December 31. Many will be happy to see the end of 2009 as well because it has seen the largest decline in global economic output and international trade since the end of World War II.

The International Monetary Fund (IMF) in its October World Economic Outlook expects world output to shrink by 1.1 percent in 2009 after having grown 3.0 percent in 2008. They expect global growth of 3.1 percent in 2010 and for growth to average 4.4 percent a year in the 2011-2014 period. Click here to read the full post and comment (Insights subscribers) »

Sad to Say, the Awful Employment Data Could Have Been Worse

On March 6 the BLS released its report “The Employment Situation: February 2009.” It was chock full of depressing news.

For unknown reasons, some 498,000 people in the US decided that February was a great time to enter the civilian labor force, swelling the seasonally adjusted total to 154,214,000 people, which was still 233,000 people fewer than in December 2008. Unfortunately, the total number of civilian employed in February fell 354,000 to 141,748,000. This meant that 8.1 percent of the civilian labor force or 12,467,000 people were unemployed and looking for work in February.

As the media duly trumpeted, that was the highest unemployment rate since December 1983 when it was 8.3 percent. Of course, that was a dramatic decline from the 10.8 percent unemployment rate of December (and November) 1982, the highest levels since the end of World War II.

Even with an 8.1 percent seasonally adjusted unemployment rate in February, that still meant that 919 out of every 1,000 people who wanted a job last month had one. For the entire 64 years since the end of World War II, there have been only ten months (September 1982 through June 1983) when fewer than nine of every ten people who wanted a job had one. That’s a record nearly every other country in the world would envy.

Click here to read the full post and comment (Insights subscribers) »