Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Stock Market SEASONAL TREND and ELECTION CYCLE - 24th Nov 20
Amazon Black Friday - Karcher K7 FC Pressure Washer Assembly and 1st Use - Is it Any Good? - 24th Nov 20
I Dislike Shallow People And Shallow Market Pullbacks - 24th Nov 20
Small Traders vs. Large Traders vs. Commercials: Who Is Right Most Often? - 24th Nov 20
10 Reasons You Should Trade With a Regulated Broker In UK - 24th Nov 20
Stock Market Elliott Wave Analysis - 23rd Nov 20
Evolution of the Fed - 23rd Nov 20
Gold and Silver Now and Then - A Comparison - 23rd Nov 20
Nasdaq NQ Has Stalled Above a 1.382 Fibonacci Expansion Range Three Times - 23rd Nov 20
Learn How To Trade Forex Successfully - 23rd Nov 20
Market 2020 vs 2016 and 2012 - 22nd Nov 20
Gold & Silver - Adapting Dynamic Learning Shows Possible Upside Price Rally - 22nd Nov 20
Stock Market Short-term Correction - 22nd Nov 20
Stock Market SPY/SPX Island Setups Warn Of A Potential Reversal In This Uptrend - 21st Nov 20
Why Budgies Make Great Pets for Kids - 21st Nov 20
How To Find The Best Dry Dog Food For Your Furry Best Friend?  - 21st Nov 20
The Key to a Successful LGBT Relationship is Matching by Preferences - 21st Nov 20
Stock Market Dow Long-term Trend Analysis - 20th Nov 20
Margin: How Stock Market Investors Are "Reaching for the Stars" - 20th Nov 20
World’s Largest Free-Trade Pact Inspiration for Global Economic Recovery - 20th Nov 20
Dating Sites Break all the Stereotypes About Distance - 20th Nov 20
Reasons why Bitcoin is Treading at it's Highest Level Since 2017 and a Warning - 19th Nov 20
Media Celebrates after Trump’s Pro-Gold Fed Nominee Gets Blocked - 19th Nov 20
DJIA Short-term Stock Market Technical Trend Analysis - 19th Nov 20
Demoncracy Ushers in the Flu World Order How to Survive and Profit From What Is Coming - 19th Nov 20
US Bond Market: "When Investors Should Worry" - 18th Nov 20
Gold Remains the Best Pandemic Insurance - 18th Nov 20
GPU Fan Not Spinning FIX - How to Easily Extend the Life of Your Gaming PC System - 18th Nov 20
Dow Jones E-Mini Futures Tag 30k Twice – Setting Up Stock Market Double Top - 18th Nov 20
Edge Computing Is Leading the Next Great Tech Revolution - 18th Nov 20
This Chart Signals When Gold Stocks Will Explode - 17th Nov 20
Gold Price Momentous ally From 2000 Compared To SPY Stock Market and Nasdaq - 17th Nov 20
Creating Marketing Campaigns Using the Freedom of Information Act - 17th Nov 20
Stock Market Uptrend in Process - 17th Nov 20
How My Friend Made $128,000 Investing in Stocks Without Knowing It - 16th Nov 20
Free-spending Biden and/or continued Fed stimulus will hike Gold prices - 16th Nov 20
Top Cheap Budgie Toys - Every Budgie Owner Should Have These Safe Bird Toys! - 16th Nov 20
Line Up For Your Jab to get your Covaids Freedom Pass and a 5% Work From Home Tax - 16th Nov 20
You May Have Overlooked These “Sleeper” Precious Metals - 16th Nov 20
Demystifying interesting facts about online Casinos - 16th Nov 20
What's Ahead for the Gold Market? - 15th Nov 20
Gold’s Momentous Rally From 2000 Compared To Stock Market SPY & QQQ - 15th Nov 20
Overclockers UK Quality of Custom Gaming System Build - OEM Windows Sticker? - 15th Nov 20
UK GCSE Exams 2021 CANCELLED! Grades Based on Mock Exams and Teacher Assessments - 15th Nov 20
Global "Debt Mountain": Beware of This "New Peak" - 13th Nov 20
Overclocking Zen 3 Ryzen 5600x, 5800x, 5900x and 5950x to 4.7ghz All Cores Cinebench R20 Scores - 13th Nov 20
Is Silver Leading Bitcoin or is Bitcoin Leading Silver? - 13th Nov 20
How Elliott Waves Simplify Your Technical Analysis - 13th Nov 20
How to buy Bitcoins using debit/credit card? - 13th Nov 20
Will COVID Vaccine Kill Gold and Silver? - 12th Nov 20
Access to Critical Market Reports - 12th Nov 20
Stock Market Dow Futures Reach 30,000 on News of COVID-19 Vaccine Trials Success - 12th Nov 20
8 Terms & Conditions You Must Know Before Asking For Life Insurance Policy Quotes - 12th Nov 20
Gold Stocks Post 2020 US Election Outlook - 11th Nov 20
Champions’ League Group Stage Draw: All You Need To Know - 11th Nov 20
Stock Market Secular Trend - 11th Nov 20
Stock Market Correction Curtailed by US Election - 11th Nov 20
What Causes a Financial Bubble? - 11th Nov 20
Ryzen 9 5900X RTX 3080 - vs UK Custom PC System Builder Review - 10th Nov 20
Killing Driveway Weeds FAST with a Pressure Washer - Saving Block Paving from LOTS of WEEDs - 10th Nov 20
Trump Fired, Biden Hired, What Next?  - 10th Nov 20
Looking for a Personal Loan? Here Is What You Have To Know  - 10th Nov 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

Economic Green Shoots Taking Root in Labor Market for Sustained Recovery

Economics / Economic Recovery May 08, 2010 - 06:01 AM GMT

By: Paul_L_Kasriel


Best Financial Markets Analysis ArticleCivilian Unemployment Rate: 9.9% in April vs. 9.7% in each of the first three months of the first quarter. The unemployment rate was 5.0% in December 2007 when the recession commenced. Cycle high for recession is 10.1% in October 2009 and the cycle low for the expansion that ended in December 2007 is 4.4% in March 2007. Payroll Employment: +290,000 in April vs. +230,000 in March, net gain of 121,000 jobs after revisions of payroll estimates for February and March. Private sector hourly earnings: $22.47 in April vs. $22.46 in March, 1.6% yoy increase, slightly lower than 1.7% gain of March.

Household Survey - The unemployment rate rose to 9.9% in April after a string of three monthly readings of 9.7%.  The sharp expansion of the labor force (+805,000) exceeded the growth in employment (+550,000) during April.  In the early stages of a moderate economic recovery, gains in employment, although robust, will fall short of the growth in the labor force and send signals that are contradictory to the message from the expansion of payrolls.  The participation rate has risen 0.6 percentage points since December, putting the April reading of 65.2% at the highest mark since August 2009.  The broader measure of unemployment moved up to 17.1% in April from 16.9% in March. 

Establishment Survey - Nonfarm payrolls increased 290,000 in April, after a revised gain of 230,000 in the prior month.  In the first four months of the year, a total of 573,000 jobs have been created of which 483,000 jobs were in the private sector.  Census 2010 accounted for an increase of 66,000 temporary jobs in the federal government during April. Four consecutive months of private nonfarm payroll gains with each successive month showing larger gains should dispel notions that this is not a sustainable economic recovery. 

Highlights of Job Losses/Gains in March: Construction: +14,000 vs. +26,000 in March Manufacturing: +44,000 vs. +19,000 in March Autos:  +4,400 vs. +3,000 in March Private sector service employment: +166,000 vs. +119,000 in March Retail employment: +12,000 vs. +15,000 in March Professional and business services: +80,000 vs. +13,000 in March Temporary help: +26,200 vs. +32,400 in March Financial activities: +3,000 vs. -20,000 in March Health care employment: +20,100 vs. +32,900 in March The extent of the improvement in the labor market is visible in the diffusion indexes.  The overall private sector diffusion index rose to 64.3%, while the factory diffusion index advanced to 65.9%, both of which are noteworthy.  The factory sector diffusion index exceeds the high posted in the previous expansion (see chart 3).

Hourly earnings in the private sector ($22.47) were nearly steady in April vs. the March reading ($22.46).  The year-over-year change of hourly earnings shows a decelerating trend (see chart 4) which implies the absence of inflationary pressures from the labor market and allows the Fed to focus on promoting economic growth.  The 0.6% jump weekly earnings points to an impressive increase in personal income during April after a 0.3% increase in March.  The 0.8% gain in the factory man-hours index suggests strong growth in industrial production during April but probably less than the 0.9% increase recorded in March. 

Conclusion - The overall tone of the employment report is significantly bullish and reinforces the view that the economy has entered a self-sustaining recovery.  The unemployment rate is a lagging indicator, which could rise even higher as more people reenter the labor force.  In April, nearly 25% of the unemployed were reentrants, the highest in the current recovery. The increases in private sector nonfarm employment in the past four months are unlikely to bring about a near-term tightening in Fed policy. With the unemployment rate still high and growth in labor compensation low and trending lower, the Fed is not concerned about wage-push inflation. Moreover, Fed Chairman Bernanke, although sounding more optimistic of late about the economy's prospect's, appears to be concerned about the continued contraction in bank lending. In addition, apparent renewed weakness in consumer spending in April, all of the financial market turmoil regarding Greece and concerns about the Chinese economy will keep Fed policy on hold "for an extended period."

by Paul Kasriel and Asha Bangalore

Paul Kasriel is the recipient of the 2006 Lawrence R. Klein Award for Blue Chip Forecasting Accuracy

by Paul Kasriel
The Northern Trust Company
Economic Research Department - Daily Global Commentary

Copyright © 2010 Paul Kasriel
Paul joined the economic research unit of The Northern Trust Company in 1986 as Vice President and Economist, being named Senior Vice President and Director of Economic Research in 2000. His economic and interest rate forecasts are used both internally and by clients. The accuracy of the Economic Research Department's forecasts has consistently been highly-ranked in the Blue Chip survey of about 50 forecasters over the years. To that point, Paul received the prestigious 2006 Lawrence R. Klein Award for having the most accurate economic forecast among the Blue Chip survey participants for the years 2002 through 2005.

The opinions expressed herein are those of the author and do not necessarily represent the views of The Northern Trust Company. The Northern Trust Company does not warrant the accuracy or completeness of information contained herein, such information is subject to change and is not intended to influence your investment decisions.

Paul L. Kasriel Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules