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A graph of employment change from January 2007 to the present. The gold dashes represent expectations while the blue bars are the actual numbers. The capstone of this weeks economic events is the release of the employment change numbers by the Bureau of Labor Statistics. http://finance.yahoo.com/news/Unemployment-rate-falls-to-88-apf-1484765217.html?x=0&sec=topStories&pos=main&asset=&ccode=
A little back ground on Non-Farm Employment Change:
This vital economic data is released shortly after the month ends. The combination of importance and earliness makes for hefty market impacts. Job creation is an important leading indicator of consumer spending, which accounts for a majority of overall economic activity.
This month added 216k jobs beating expectations of 191k jobs and lead to positive market performance for the first day of April. Many economists agree that you should not take the numbers at face value (I agree). It is important to look at which sectors are adding jobs and which are still contracting. This month jobs were added to factories, retailers, the education and health care sectors and professional and financial services. This offset job contraction in government services.
I am quite optimistic about this report as jobs were added across multiple sectors, but when we include "part-time workers who would rather be working full time, plus people who have given up looking altogether, the percentage of "underemployed" people" is still 15.7% versus the more favorable reported 8.8% which gets placed in the headlines.
While expectations for the rest of the year are optimistic, the economic recovery is slow and there are catalysts around every corner. My consensus... be cautious.
Question: What are you thoughts on job market improvement, this months employment numbers, economic recovery, and any other topic that relates to the article?
It does seem like a good sign, however I recently read something about how much unemployment estimates can change just due to statistical variance so I will be more convinced after a few more months. I also think focusing on these unemployment numbers is kind of a short term outlook for policymakers who should focus on a bigger picture of sustainable job creation.
ReplyDeleteJust wanted to mention there was an article today from the new York Times I think, that spoke about this same topic and the relevance of unemployment numbers to actual unemployment. I will search for the article and amend my post tomorrow morning. The internet is getting really slow now. TTFN
ReplyDeleteGoing off Eric's post, could less people be looking for employment now, hence unemployment levels lower than actual? I'm not sold by the statistics.
ReplyDeleteI'm intrigued by how this plays into the falling consumer confidence levels. It seems odd that unemployment levels would be falling and yet consumers are so leery about the market. I agree with Laura and EMeishe; I'm not quite convinced by the statistics.
ReplyDeleteThe economy is still in recovery. People are still trying to come back from the devastating crash in 2008. I'm sure the media is looking to give people some good information and inspire faith in the economy. It definitely marks a good sign for our country, but we still have a ways to go. I'll be interested to hear future statistics too.
ReplyDeleteAlso, I thought it was really interesting to hear what markets are hiring which plays a difference in the statistics. I know that the government has had hiring holds in some departments (like the FBI), so its interesting that other industries are able to pick up the slack.
I agree with Eric and Laura that these statistics can be off and we shouldn't gauge the status of our economic recovery off of this stat. As Chris wrote, some sectors such as financial services and education hired more people than expected but at the same time government service jobs were being cut so even though jobs are being created, jobs are also being lost. After business statistics class, I am skeptical of most statistics in the media.
ReplyDeleteI agree with Chris in that this news is very uplifting. As I look to apply to medical schools and hope to work in the medical industry it is great news to hear that business and professional services added 78,000 jobs health care and social services which added on 44,000 workers.
ReplyDeleteI can see why Chris suggests to take this news with caution because the public sector is still hurting. According to a recent CNN article "Local government staffing, which includes teachers, police and fire fighters as well as other administrative jobs, held up pretty well in the first 18 months of the recession while business payrolls were plunging. But those payrolls have now lost more than a quarter-million jobs in the last 12 months, with more than half coming from public schools."
The outlook for our future is still very dim. I firmly believe that these cuts towards public school system will have major repercussions in the long term. Also, I agree with Andrew in that the statistics, although refreshing, don't explicitly indicate that job growth still isn't strong enough to bring the unemployment rate down rapidly to pre-recession levels.