Monday, March 25, 2013

Is Jobs Growth Reaching a Higher Level?

I want to highlight a divergence between sunny views of the labor market expressed in a Bloomberg article today with the ongoing Gallup survey of hiring/not hiring responses of American workers.  Bloomberg's story is more opinion than presentation of new data.  It is called (sic) Payrolls Growth Vault to Higher Pace at U.S. Companies (LINK).  It has anecdotes and some modest info.  Here is a representative small section:

 Companies from Ford Motor Co (F). to a California tortilla maker are stepping up hiring as the economy improves. The result, say Maury Harris of UBS Securities LLC and Allen Sinai of Decision Economics Inc.: Payroll growth is vaulting to a faster pace of about 200,000 a month, after averaging 167,000 in the second half of last year.

“The new normal is 200,000,” said Sinai, chief executive officer of the New York-based investment-research company. Payrolls may rise 216,000 this month after climbing 236,000 in February, the most since November, he estimates. 
Russell Price, a senior economist at Ameriprise Financial Inc. (AMP) in Detroit, predicts employers will take on 2.5 million workers this year, after hiring 2.2 million last year. 
“And that may be a little bit on the conservative side,” added Price, the top-ranked payrolls forecaster for the two years ended in January, according to data compiled by Bloomberg.
Anyone who remembers the robust jobs market of most of the '90s remembers that these are relatively modest expectations.  They are perhaps consistent with a continued Goldilocks scenario for financial markets- strong enough to allow continued moves toward fiscal balance and also to allow ultra-low interest rates to continue.

These reports do not fit with the continued recessionary-level of hiring/not hiring seen by respondents to Gallup's daily survey (LINK).  This is at a +15, the same level that it had dropped to in September, 2008 before Lehman went under and when jobs were being shed at a rapid pace, later analysis showed.  This metric is flat as a pancake for the past year.

My own sense is that businesses have been pushing a lot of workers quite hard the past few years, and it's time for them to accept lower profit margins.  Just as equipment does, people wear out.  Here's hoping for more people working shorter hours.

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