Thursday, August 13, 2015

More evidence we are past the midpoint for jobs growth

 - by New Deal democrat

Yesterday's JOLTS report adds to the evidence that this expansion is past its midpoint and that the expansion of jobs is heading towards maturity.

In the last expansion, the only one for which JOLTS provides complete data, hiring stalled out for over a year while job openings continued to grow:

A close-up of the last year shows that for the last 9 months, the same thing has happened.

Similarly, layoffs and discharges bottomed out shortly after hiring stalled:

A close-up of the last year shows a bottom in layoffs and discharges last November, one months before the peak in hiring to date.

Further, as I noted on Tuesday, a weakening of the Labor Market Conditions Index tends to lead a decline in YoY jobs growth by about 6 - 12 months:

That is further evidence that we should expect less YoY growth in jobs for the remainder of this year as compared with 2014.

Finally, unsurprisingly 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.

What would lead to a positive reboot in jobs growth? A decline towards new lows in mortgage rates.  Failing that, we are in the latter stage of the jobs expansion.