Friday, October 2, 2015

Told you so: weakening job growth edition

 - by New Deal  democrat

After averaging over 200,000 during 2014 and the first half of 2015, the last two months have featured job growth beginning with a "1."    A surprise? Well . . .

Here's me on August 11, 2015, The Lbbor Market Conditioins Index as a Leading Indicator:

"As shown in the graph below, the [Labor Market Conditions Index] consistently leads the YoY% growth in jobs by 6 - 12 months, but YoY job growth (red) is a much smoother measure:


"Since  the LMCI does lead the much smoother YoY growth in jobs, it strongly suggests that YoY payroll growth is going to decline over the next 6 months or so.  And that can only happen if those payroll numbers generally come in under 225,000, and probably even below 200,000 through next winter."

"[U]nsurprisingly housing permits lead jobs growth as well:

"While a steep decline to a stall in housing, as happened in 2014, has not always led to a stall in jobs, usually it has led to at least some weakening, sometimes slight, sometimes very marked.  Since the lead time varies between 6 to 18 months, we are about due for last year's weakness in housing to lead to some weakness in payrolls."

As I get to say from time to time, you are reading the right blog.