It’s been nearly a week since the atrocious payroll report for November seemingly put a halt to what was starting to look like a nascent jobs growth recovery. The report was especially surprising as it defied favorable economic indicators released in the preceding weeks.
But since then, we’ve seen a steady accumulation of observations and data releases suggesting that the outlook for jobs growth is (somewhat) better than the report indicated. Let’s have a look:
1. The report itself was abnormally skewed by the seasonal adjustment. Shortly after the report came out, a sharp-eyed Phil Izzo spotted this and explained the particular circumstances affecting this month’s report:
Retailers generally hire workers in the lead up to the holiday season, so in an effort to smooth out the data for the year, the Labor Department adjusts those numbers downward late in the year. So, while the retail trade sector actually added about 300,000 workers on a nonseasonally adjusted basis, that’s less than the number the Labor Department was expecting them to add based on historical comparisons.
If employers waited longer to hire for the holidays, we might see a turnaround in the sector next month. The Labor Department conducts their survey in the week that includes the 12th day of the month. In November, that week came early because it fell on a Friday this year and still gave retailers a week and a half to add staff ahead of Black Friday. Anyone hired after the 12th wouldn’t have been counted in today’s release.
2. Daily tax receipts climbed 7 per cent last month and appear to be on an upward trajectory, according to Deutsche Bank. The hat tip and link for this one go to Joe Weisenthal.
3. Employers are planning to hire at an accelerated pace in the first quarter of 2011, according to a survey of employers from Manpower Inc. Hat tip to Daniel Indiviglio.
4. A survey of CFOs makes the same point. Via Bloomberg:
The share of executives who said they plan to hire new workers in 2011 rose to 47 percent, compared with 28 percent who forecast they would add jobs this year, according to a Bank of America Merrill Lynch survey released today. Sixty-four percent said they expect revenue growth, up from 61 percent in last year’s survey.
5. Job openings continued to grow but aren’t being filled at the same pace, according to the latest JOLTS data — suggesting that some sectors have a shortage of workers but haven’t started hiring to fill them yet. Obviously it would be better if the growing demand for labour were also being matched by new hires, but it’s better than not no demand whatsoever. Here’s additional commentary from economist Mike Mandel:
This is pretty much the pattern across the whole economy. What is going on here? There are three possibilities: Mismatch, offshoring, and lags. Mismatch says that companies would like to hire, but can’t find the right people. Offshoring says that companies have openings, but they are filling them overseas. Lag would say that companies have openings, but it’s taking them time to pull the trigger, given the overall uncertainty.
I’m going to vote for a combination of offshoring and lag. I’m sure that some job openings are going overseas. But the statistics also suggest that hiring pressure is building up in some sectors of the economy. If that’s so, 2011 may be a better year for the labor market than people expect.
6. The 4-week moving average of initial unemployment insurance claims declined again. Click here for Thursday’s report, and here’s what the figure looks like over the past year:
Of course, all of this needs to be considered in the context of an economy where, as the Labor Department also reported yesterday, “the number of individuals who looked for a job but did not work at all during 2009 increased by 2.7 million over the year to 5.8 million.”
But we only said the situation isn’t as gloomy as the November numbers indicated — not that it’s anywhere close to where it needs to be for unemployment to decline meaningfully.
Related link:
Payrolls breakdown … bletch – FT Alphaville