Over the past few days, the Labor Department has released two periodic reports about employment in the US. Both were favorable and suggest that the economy was stronger during the winter than the consensus has been theorizing. Either the severe winter was less of an impediment than most thought and/or the underlying strength of the economy is greater. The safest course is to assume that the reality is a little bit of both. But if it’s mostly the latter, the groundwork is being set for s positive surprise about jobs as the weather improves.
the Employment Situation
Last Friday, the Bureau of Labor Statistics published its monthly Employment Situation report. The Establishment Survey part of the ES showed that the country gained +192,000 new jobs during March, which was considerably better than the initial reports for the prior two months. All the gains came from the private sector; government neither added nor subtracted from the total.
Revisions to the prior two months’ data were also a positive. The grim +113,000 figure reported for January, which was revised up to +129,000 positions last month, was upped again–this time to +144,000. The February figures were also increased, from +175,000 to +197,000.
These figures describe an economy that’s absorbing all the new entrants to the workforce and chipping away at the long-tern unemployed at a rate of about 50,000 a month. The latter rate would suggest that we won’t be back to full employment for lat least several more years. Personally, I think the reality is a lot more complex. Nevertheless, there appears to still be plenty of labor available for employers–enough that big wage gains, the earliest signs of incipient inflation, shouldn’t be a worry.
JOLTS (= Job Openings and Labor Turnover Survey)
The JOLTS report for February came out yesterday. It’s the government’s compilation of the number of unfilled jobs available in the economy, as well as an analysis of the reasons why people leave the jobs they have. Included in the report is an interesting series of highlight graphs.
Overall, JOLTS portrays an economy that has steadily progressed back toward normal in job creation since mid-2009. Although it may be difficult to say exactly what “normal” is in the early 21st century, most measures seem to be just about back to their levels in 2004. Certainly, the job situation is nowhere near as buoyant as it was in early 2007–but that’s when the economy was overheating as a result of the banks’ home mortgage fraud.
At the end of February, there were 4.2 million unfilled jobs in the economy. There were 2.5 unemployed people per job opening vs. 6.2 in the depths of the recession. Of total job leavers, about 60% are quitting, meaning leaving voluntarily (and presumably for other jobs), and 40% being layoffs and discharges. That’s about the same ratio as in 2004. However, the absolute number of quits, 2.4 million in February, is still below the 2.5-2.6 million a month that occurred in 204. It’s also way below the 2.8 million a month rate that prevailed in mid-2007.
The quits figure seems to suggest that there’s still considerable reluctance on the part of employees to take the risk of leaving secure jobs, even with the promise of higher wages and more fulfilling work.
Whatever gyrations short-term traders may be putting the securities markets through, the overall economy in the US seems to be healthy, and achieving steady, if unspectacular growth. There’s also some possibility that growth will accelerate a bit as the weather improves.