US employment data…. perspective 2

Increases in private payroll employment are weak in historical terms.  But if only that were the only issue: weak population growth, falling participation rates, elevated part time employment and continued weakness in self employed categories raise serious concerns for growth dynamics.   

image_thumb1

The recovery in employment is weak in historical terms.  The following shows an index of employment growth for various recessionary periods starting 12 months prior to the end of each recession continuing to a point in time which mirrors the time frame of the current recovery:

image_thumb4

Adjusting for employment growth, growth in employment has been weaker still:

image_thumb3[1]

And this is despite a historically weak period of population growth:

image_thumb5[1]

image

So we have weak population growth, weak employment growth and a significant decline in participation rates:

image

Participation rates are key to GDP growth dynamics.  The US has a relatively high dependence on personal consumption expenditure compared to other countries and historically a much higher participation rate.  So a lower participation rate should translate to a smaller PCE component, and since this has yet to fully adjust, there is a major structural hurdle to growth here.

But if it were only a case of weak employment growth and falling participation and population growth.  Part time employment remains elevated and this is something that is not picked up in the CES numbers (it is in the current population survey) and is a qualitative indicator of demand and employment weakness that has not reset post crisis:

image

image

And, we can also adjust full time employment data for population growth:

image

Of concern also, as a recent Zero hedge post notes, smaller companies and smaller businesses are an important area of job creation, and like part time employment stats, the incorporated and unincorporated employment stats have yet to reset to prior crisis levels:

image

image

Leave a Reply