Today’s speech by Janet Yellen is a mirror of Ben Bernanke last week when it comes to the costs and risks of continued asset purchases. “At this stage, I do not see any [risks] that would cause me to advocate a curtailment of our purchase program,” she says.
Where Ms Yellen, the Fed vice chair, breaks some new ground is on the definition of a “substantial improvement” in the labour market.
A reminder: the Fed says it will keep on buying assets, currently at a pace of $85bn a month, until it gets that substantial improvement. Ms Yellen sets out five measures which basically form a Fed dashboard for the labour market. Here they are: Read more
In a mixed set of British labour market figures today, unemployment was up, the claimant count was down, and earnings growth was rather flat. There was nothing in the figures to suggest inflation is getting out of control and when you look at the details of the Labour Force Survey data, it becomes clear that the employment picture will worsen over the next two releases.
How can I be so sure? Because the official employment and unemployment figures are based on a rolling three-month average, but the Office for National Statistics also publish monthly data for transparency. November was a shocker. The charts show this, with the employment rate falling to its lowest level since the crisis started offset by a spike in inactivity not unemployment. Read more
Unemployment has risen for the first time in six months, the Office for National Statistics said this morning, calculating that the rate rose by 0.1 percentage points to 7.9 per cent between August and October compared with the May to July quarter. This rise translates to a 33,000 increase in unemployment and an almost identical decrease in employment.
The trouble with the numbers, however, is that they are seriously distorted by an apparently rogue survey month in July which showed very strong employment levels and low unemployment. A month ago, July was part of the latest three months and now it is in the base for the comparison. Read more
One of the key debates within the Federal Reserve and US economic policy circles in recent months has been whether the high unemployment rate is mainly due to structural or cyclical factors.
In the end, the prevailing view is that although there are some mismatches in skills and geography in the US labour market, the main problem is a broad-based lack of demand, which will hopefully be aided by even lower borrowing costs – hence next week’s likely move towards a second round of quantitative easing.
But a survey out today by Challenger Gray & Christmas, may, on the margins, challenge that certainty. A quarterly poll by the Chicago-based employment group found that the “relocation rate” of American workers – or the percentage of job seekers who found a new position and moved to a different region as a result – hit a record low of 6.9 per cent in the third quarter (the survey started in the 1980s).
To be sure, US labour market mobility – traditionally one of the strengths of America’s economic structure – has been on the decline. The annual average relocation rate in 1990 was 30.5 per cent, sliding to 22.9 per cent in 2000 and 13.3 per cent in 2009. But it has taken a plunge this year, with the average for 2010 now at 7.3 per cent. 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
More surprising effects of the global economic storms on labour markets. Money Supply has looked before at the relatively modest effects on eurozone unemployment. The table below, taken from today’s European Central Bank monthly bulletin, shows the effects on growth rates in labour market participation rates.
Perhaps counter-intuitively, the rate increased slightly overall last year, but the rise was concentrated among women and older workers (where the increases in participation rates were faster than population growth). The obvious explanation is that households’ tightened economic circumstances persuaded more women to go out to work and more workers in older age groups to stay in employment. Read more
Perhaps Japan will take a note out of Israel’s book. There is an ongoing war of words between Japan’s finance ministry and its central bank, in which the government asks the bank to tackle deflation, and the bank asks the government to fix the fiscal deficit. As Robin has pointed out, the ‘pressure’ being applied to the bank is more of a nudge than an ultimatum. But if the government wanted to step up the pressure, it could use the minimum wage to affect monetary dynamics. This is a charge levelled today by Bank of Israel governor Stanley Fischer against the Israeli finance ministry, who told parliament the tactic has been used at least once (Israeli speech from Bloomberg). Read more
The US will have a jobs rich recovery while Europe will have a jobless one. That is the unspoken conclusion of the OECD’s latest Economic Outlook, writes Chris Giles of the Financial Times. It uses some wonderful charts as evidence for its case. Read more
British unemployment may have stopped rising, writes Chris Giles of the Financial Times Read more
International comparisons of productivity do not yet show the huge differences that have occurred in 2009, writes Chris Giles of the Financial Times. They still show a smooth path, one that will not continue when the 2009 figures are finally published. Read more