Help Wanted OnLine; Pace of Hiring Accelerating by Todd Sullivan, ValuePlays
Help Wanted OnLine (HWOL) was reported this morning at www.conference-board.org/data/helpwantedonline.cfm as relatively flat. Looking at trends in all the data speaks of something very different beneath the surface.
Help Wanted OnLine is the level of outstanding help wanted ads for the month, but it says nothing about the pace of hiring. To get to this we need to compare the HWOL with the number of New Ads for each month and examine the trends for each. When one does this interesting details emerge. We see HWOL rising with New Ads from the lows of March 2009 till Feb 2012 when HWOL begins to go flat. New Ads followed by going flat a couple of month later till ~November of 2013 when we see an acceleration with HWOL remaining flat. With Help Wanted OnLine running flat while New Ads are rising means more rapid hiring.
Explained another way, the accelerated pace of New Help Wanted Ads is being offset by accelerated hiring to such a degree that by the end of the month the actual of level of Help Wanted OnLine appears relatively unchanged. THIS IS VERY GOOD NEWS FOR EQUITY MARKETS!!
An acceleration in hiring reflects an expansion in economic activity, more jobs, higher personal income and consumption and above all historically higher equity prices. The recognition of continued economic expansion by investors historically has resulted in the switch of fixed income positions to equities which results in higher 10yr Treasury rates. Higher 10yr Treasury rates at this point in the economic cycle has the effect of making home mtg lending more profitable , acts to spur home lending and thus construction and job growth in Residential Construction sector. Mtg lending and Residential Construction tend to spur each other till single-family housing demand has been satisfied. History lets us estimate this may last 5yrs-7yrs.
Economic trends look quite good. I continue to recommend buying equities and selling fixed income based on expected returns.