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Sunday, March 7, 2010

More Data Shows Labor Market Positioned for Big Gains

On Friday the government reported that the unemployment rate in the U.S. held at 9.7% in February and employers cut fewer jobs than anticipated. The stabilization in the labor market continued even as two East Coast blizzards of 2-3 feet each forced closings of some businesses during the period.

Furthermore, the jobless rate, which has not increased since October, held steady even as more people entered the workforce.

The steady unemployment rate owed to a 308,000 increase in household employment following a 541,000 January gain. These increases follow monthly declines of as much as 967,000 during the recession. Moreover, the labor force started to expand, last month by 342,000, after a lesser January increase. Throughout 2009 the labor force contracted slightly. The labor force participation rate also rose.

"The weather effects were enough to transform [the data]," said David Resler, chief economist at Nomura Securities International Inc. "Job growth is happening as we speak."

Over at Fortune, they continue to expand their list of employers that have at least 150 openings. And the larger firms are now ramping up hiring significantly since the first of the year.

Among companies adding workers is Accenture Plc, the world’s second-largest technology-services provider, which plans to boost payrolls by about 50,000 this year. Accenture says it is on track to have started new employees in as many as 9,000 jobs in the U.S. by the end of August.

"We are seeing a very broad uplift globally" in demand, says John Campagnino, director of worldwide recruiting, in a interview on Wednesday.

Beyond full-time hires, the number of temporary workers increased by 48,000 in February, the fifth straight monthly gain.

Amidst the snow, factory payrolls increased 1,000 in February after rising 20,000 in the prior month. Most economists had called for a drop of 15,000.  Manufacturing employment continues as a leading segment in labor growth.

Friday’s report showed that almost 1 million Americans said bad weather prevented them from getting to work during the survey week. About 290,000 people on average say bad weather has prevented them from getting to work, according to figures going back three decades.

Economists at Macroeconomic Advisers LLC project that the weather actually reduced the payroll count by anywhere from 150,000 to 220,000 workers. The drop will probably be reversed this month, they said.

The most recent storm of similar intensity that occurred during a survey week was in January 1996. The data for payrolls that month, which have gone through several revisions since the initial estimate, showed a 19,000 drop in employment in the January period followed by a gain of 434,000 in February.

We continue to look for the US economy to add a significant number of jobs in spring and summer this year with the unemployment rate beginning a steady decline in the monthly readings just ahead.

Many argue that the return to job growth has been "slow." On the contrary, this has been the most rapid turn from net jobs losses to net jobs gains of any business cycle in the last century. A jobless recovery? Not this time.


  1. Haven't we already been in positive GDP growth for Q3, Q4 and January and February? That's about 8 months of recovery without job growth (according to the establishment survey). Seems to me like we are already in a jobless recovery.

    We'll get positive job growth very soon, but consider how many jobs have been lost. You can't fire everyone right? the next couple of months will also show census workers impacting the result and will make for some pretty good reports for March, April and May....

    Once June July August come around when the Census workers drop off, end demand better be making huge comeback, or we'll just see stagnation.

    Score one for the bulls on this job report, but my point is that we've already undergone a jobless recovery and hiring I still believe will be rather stagnant after a fast start in the Spring.

  2. Anonymous,

    Yes you are correct that come June it will be a year since GDP growth began. In historic terms the return to jobs growth is unprecedentedly fast in the recovery cycle - it typically takes 3-4 years after a return to GDP growth.

    I challenge you to find a recovery cycle in the last century that has gone from nearly net minus 700,000 per month to net positive job growth in less than a year. In past cycles "jobless recovery" referred to the fact that we never started adding jobs in the growth phase...

    And no, you can't point to all those gains as all census jobs.

    Stagnation? Are you kidding me?

  3. I never understood the term "jobless recovery". All recoveries, no matter how rubust, are initially jobless. Its not unusual to have job growth several quarters after a recovery begins.


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