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VIDEOEmployment Report Confirms Gathering Economic Momentum
By
James Kostohryz
Feb 05, 2010 11:00 am
Three indicators have been on the rise for several months.
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The annual benchmark revisions were down, confirming that job losses during the recession were worse than initially reported (though nowhere near as bad as the outrageous speculations of those obsessed with the birth/death model). We'll surely hear lots of noise about this from bears today. But these revisions make little difference as that was past data, mainly related to the first half of 2009. If anything, the revisions may emphasize that the slope or intensity of the current recovery is steeper.
The decline in the unemployment rate from 10.0% to 9.7% is nothing to celebrate (or lament) as it relates to revisions in estimates of the labor force. The decline in the unemployment rate was not due to any rise in employment.
There were quite a few hopeful signs to be found in the report for those who bother to look at the details. Private manufacturing jobs rose. ISM data suggests further strength down the road. Service sector jobs rose by 40k. Strength in this area is key because it represents the bulk of employment. Retail trade employment also rose by 42k, a very encouraging indicator of private consumption, the key driver of US GDP growth.
Ironically, total government employment fell. In future months, government employment should rise. Construction jobs fell by 75,000, probably a weather-related anomaly.
Temporary jobs rose by 52,000. Average hours worked rose. Overtime hours worked also rose. These three indicators have been on the rise for several months. This is hopeful because they tend to be leading indicators for more hiring down the pipeline.
Overall, the employment report provides further evidence of gathering economic momentum in the US.
No positions in stocks mentioned.
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