- by New Deal democrat
Leading employment indicators of a slowdown or recession
I am still highlighting these because of their leading nature for the economy overall. These were almost uniformly negative, their worst performance in a year:
Wages of non-managerial workers
Aggregate hours and wages:
Other significant data:
Needless to say, this was a very disappointing report compared with all of the employment-related indicators we have seen in the past few weeks. My main thoughts are that (1) this was compositional; and (2) there is likely to be a substantial revision.
Usually when there is one report that sticks out like a sore thumb compared with other related data, it gets revised significantly. This is particularly so when one looks at the composition of the gains and losses in this report. Consider the following two points:
- there were job gains in food and drinking establishments of 187,000, over 2/3’s of the entire month’s improvements.
- the entire goods-producing sector of the US economy - which has been at very least red hot in the past few months - *lost* 16,000 jobs! This includes job losses in residential construction (housing), which has been going through the roof in recent months.
Another anomaly is that those unemployed less than 5 weeks, which usually correlates fairly closely with initial jobless claims, *increased* by 237,000; plus, both permanent and temporary layoffs *increased* - a direct contradiction to the big decline in new jobless claims in the past 6 weeks.
Another big compositional change was the big decline in temporary jobs, paired with a huge increase in full time employment. This suggests that previous temps were converted to permanent hires.
Finally, note that the YoY% increase in average wages completely reversed, and made an all-time series low (although still positive).
So, basically, either (1) bottlenecks in supplies caused a complete halt in the goods producing sector including both manufacturing and construction; plus there was an anomalous contraction in professional and business services; or (2) there will be substantial upward revisions to those aspects of the report. I am more inclined to believe that #2 is the primary driver of this relatively poor report than #1.