Friday, April 02, 2010

You Doubted that We Are in a Recovery? Jobs Up by 162,000 Confirming the Household Uptrend

Confirmation for the Recovery

Mammon Among Friends has been dating the cyclical trough at June, 20010. Skeptics can now finally find confirmation that there is indeed a recovery in the jobs data announced this morning.

The Bureau of Labor Statistics announced, "Nonfarm payroll employment increased by 162,000 in March, and the unemployment rate held at 9.7 percent. Temporary help services and health care continued to add jobs over the month. Employment in federal government also rose, reflecting the hiring of temporary workers for Census 2010. Employment continued to decline in financial activities and in information."

The Household Survey of Employment

I have been following the household data very closely.  While noisy and trend distorted by the Census Bureau's insensitivity to the need for useful time series, the household data do not suffer from the cyclical biases of the payrolls data.

The unemployment rate remained at 9.7 percent in March, below its cyclical high of 10.1 percent in October.  For three months, households have reported large increases in employment after a huge drop in December (During Christmas, retailers did not hire as many workers as the seasonal adjustment process projected.)  Labor force growth has been strong.

Employment increased faster than population again in March.  Common sense dictates that the employment ratio, which hit bottom in December,  should be a long lagging indicator.  Bottoming out six months after the cyclical peak would be consistent with that characterization.

The unemployment rate is now five months past its cyclical high and the employment ratio is three months past its cyclical low.  This reflects the global recovery.

The Economic Recovery

We are emerging from a financial and economic crisis of historic dimensions.  Unemployment reached levels not seen since 1982.  America suffered the largest falls in industrial output and housing starts since the “Roosevelt Recession” of 1937-8.  

However deep the recession, the recovery is well underway.  A long list of indicators hit bottom last year and are rising: auto sales (February), durable goods orders (March), real retail sales (April), housing starts (April), and industrial production (June.)  The fall in global industrial production ended in March as did world trade’s in May.
Aircraft orders were up sharply in February according the the Census Bureau for the second straight month.  The BLS payroll data indicated aerospace employment was level for March (it does not break out the detail in its monthly reports.)

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