The market thinks the June jobs report is taperific and that looks basically correct: at this pace of payrolls growth a September slowing of QE3 seems likely. But there are enough complications to make the market reaction – 10-year Treasury yield up eighteen basis points at 2.68 per cent – look over the top. Read more
(1) There is no need to panic. After the purchasing managers’ index for manufacturing came in below 50 on Monday there was some cause to worry about the health of the economy – but the rise in the services PMI, from 53.1 in April to 53.7, suggests that consumer demand is still there.
I’ve done about 1,000 words for tomorrow’s paper about today’s payrolls numbers, the seasonal and statistical effects that Wall Street economists are arguing about, and the second month of divergence between the household and establishment surveys.
I don’t know what it all means and I think that’s the point: the Fed still has no clear steer on the labour market and will have to hope that it gets one by April.
Today also saw the annual benchmark revisions to the establishment survey. We already knew that it would show still lower employment as the US came out of the recession: Read more
At first glance, the numbers are finally going in the right direction – for men, at least, and driven by record-breaking levels of part-time work.
The labour market is growing again: employment rose and unemployment and inactivity fell in the second quarter, latest ONS figures show. The employment rate, which had been falling steadily, rose 0.4pp to 70.7 per cent, while the unemployment rate tempered slightly from 7.9 to 7.8 per cent.
This is a welcome change from several months in which both employment and unemployment were falling: i.e. the labour market was shrinking.
But the good news has a definite sex bias. Good news for male workers overshadows or is offset by a mostly worsening picture for women. For instance, Read more
Tomorrow, the Bureau of Labour Statistics is expected to say that private sector payrolls rose by only 42,000 in August, and that unemployment went up. Scrutiny of the numbers will be intense: both economic, for evidence on the health of the recovery and the Fed’s next move; and political, for insight into the Democrats’ prospects in this autumn’s elections.
But the 42,000 (or rather the likely -100,000 headline) is the difference between the 138,960,000 Americans who were employed in July and however many had jobs in August. A change of 100,000 is 0.07% and a change of 42,000 is 0.03% of the total. Read more
Canada was the first G7 country to start raising rates, and has enjoyed consistent growth for nine months, bar a static April. Latest data show slight growth in May of 0.1 per cent.
However, data show non-farm payrolls fell in May by 0.2 per cent, or 25,000 people. To add to the mixed picture, the central bank reduced growth forecasts 10 days ago, even as it raised rates, and three days later, inflation fell to just 1 per cent. It seems Ben Bernanke’s oft-quoted description of unusual uncertainty, would apply equally well north of the border.
There have never been more part-time workers in the UK, since at least 1992, when ONS downloadable data begin. The level – now at 7.82m – helped drive another quarter of rising employment, though aggregate hours worked fell, ONS data show. Read more
Ahead of the past few US nonfarm payroll reports (here, here and here), I’ve made a big deal about revisions to the headline numbers in the months (and years) after they’re initially reported. When the economy was getting worse, the Bureau of Labor Statistics massively underestimated the size of the losses in their first jobs reading (for several months revisions exceeded 100,000). Now that the market appears to be improving, the BLS seems to be underestimating the gains.
The election campaign has kicked off with another fight about jobs and the economy. Forgive my naivety, but the distortions and liberties taken with economics by both sides over taxes and jobs have already been breathtaking.
David Cameron, the Conservative leader, launched his campaign promising to stop “the job tax which would wreck our economy”, which is even more starkly illustrated in the latest Tory poster campaign. Pity that poor economic green shoot.
All of this hyperbole is nonsense. But showing no greater regard for economics, Gordon Brown, still prime minister until 6 May at least, warned: “Unemployment is falling but a party that does not believe in government action would put jobs at risk”. I have discussed this canard many times in this blog and will not go through it again today.
Instead, let’s just focus on the economics behind jobs and taxation briefly. The subject is deep, not fully settled and complex. But there are three things on which most economists would broadly agree. The fact Britain’s politicians ignore them does them no credit.
First, Read more
It’s happened again. Both employment and unemployment fell last month, and at an increasing pace.
Unemployment was down 2.458 -> 2.457 -> 2.449m (December -> January -> February). Read more
Economists in the US, have signed a petition for a hiring tax-credit… so civilised. Brad De Long, professor of economics at UC Berkeley (and well-known blogger) has posted a draft letter from a bevy of reputable economists (including Joseph Stiglitz and Mark Zandi) asking Congress to implement “additional emergency policy measures to jump-start job creation.” Their preferred measure – a tax credit.
A well-designed temporary and incremental hiring tax credit is a cost-effective way to create jobs, and could work well in the current environment. At a time when GDP is beginning to rise and demand is starting to return, private firms are likely to respond to such a tax incentive by hiring sooner and more aggressively than they otherwise would have done.
Figures just out show the UK labour force is shrinking. The same happened last month.
Figures for January show employment is down from 28.921m to 28.905m, and unemployment is down from 2.458 to 2.457. The changes are slight enough to warrant three decimal places, and it should be noted that the change to employment are within sampling variability (+/- 129).
The rising number of economically inactive (“Not labour force” in the diagram, right) is largely driven by men. Many are becoming students, a 2.8 per cent rise on the quarter (4.3 per cent for men; 1.3 per cent for women). Many of those surveyed want a job but are excluded from the unemployment numbers because they haven’t been looking for work in the past four weeks, or those who are looking but unable to start in the next fortnight (Table 13).
Within unemployment, two trends are clear. First, claims for unemployment benefit are still rising. They are up 30 per cent on the year, rising more for women (37 per cent) than for men (28 per cent). The claimant count fell last month by 0.9 per cent, but have regained that ground this month, rising 1.5 per cent.
Second, the duration of unemployment continues to rise, with those seeking work for more than 12 months seeing the fastest rise in caimant count, up 9.2 per cent in the last month alone (Table 11(1)). Young claimants were by far the worst off, with claimants in the 18-24 age bracket rising 23.7 per cent in the month. Read more
Official figures show Britain’s economy has contracted by almost 6 per cent this recession; the US economy by only 3.2 per cent. Yet the employment declines have been much smaller in the UK: OECD figures suggest British employment has fallen only 2 per cent , compared with 4.5 per cent in the US. As the chart from the Office for National Statistics shows, UK employment stopped falling around May this year, some seven months ago.
We have blogged frequently on these enormous transatlantic labour market differences. Ralph has explained the European Central Bank’s concern that short-time working schemes in continental Europe explains much of the difference, but that argument does not apply to the UK, where there have been no such schemes. Read more
Fifty per cent of the Japanese public think the current interest rate is too low, even though almost 90 per cent of them consider current economic conditions slightly or very unfavourable. People’s views on the future of the economy are increasingly driven by personal or business experiences rather than by the media or official data – and their personal experience is increasingly negative: the survey suggests falling income levels, worsening household circumstances and rising fears over employment and working arrangements.
Jobs data looks healthy in Brazil and the square mile, but less rosy for manufacturing workers and journalists, although wage data may be good for those employed, whatever the sector. Commodities are ever more popular and gold could surge if China bans exports Read more
Protectionism a likely US-China theme at the G20; domestic vs. imported inflation; the drop in US consumer debt explained; and continuing falls predicted for UK housing Read more