Wednesday, June 8, 2016

Maybe It's Time to Be Concerned About the Jobs Market

Employment statistics are a very noisy data series.  So it's best to look at their longer term performance to get an idea of their overall direction.

The chart about tracks the rolling 3, 6, and 12-month average employment gains since 1994.  The 3-month rolling average (gray line) is near its lows for this cycle.  So is the 6-month moving average.

Consider the above information in relation to corporate profits:

Corporate profits peaked in late 2011 and have moved sideways since.  They declined in 4 of the last 6 quarters.  And the 2-month increases in that time were weak.

This is not an environment where we can expect big increases in job growth.