Look Past the Headlines – Employment Trends Are Good

Monday, November 9, 2009

Inside the newsThe media is filled with 10.2% Jobless! news. Breathless reporting attracts an audience, but it does little to enlighten. In fact, it misleads and frightens. The real news is that the leading employment indicators continue to improve. We have real, positive trends in the works.

If you haven’t done so, please read my comments in Is Unemployment Now A Leading Indicator? No!, then continue on…

First, here is an update of the graph from my previous write-up. Clearly, the positive trends continue.

Leading empl ind 10-09

Now, look at two other leading employment indicators: overtime hours worked (manufacturing) and temporary help services employment. Although not part of the Leading Economic Index calculation, they do pick up ahead of overall employment.

Overtime hours - mfg

Temp help svcs empl

There are strong, practical reasons behind these measures being leading indicators. When conditions begin to recover, companies turn first to their own employees, reducing layoffs (causing initial unemployment insurance filings to decrease) and increasing hours worked (both regular and overtime). Then they boost their use of temporary help services. Finally, when they are convinced that growth has returned, they create jobs and add new employees. That’s why these leading employment indicators can perk up while overall unemployment worsens.

So, ignore the headlines and watch the leading indicators. They continue to signal better times ahead.

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John Tobey on Seeking Alpha

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November 2009