US Labor Markets Showing Further Positive Indicators

US Labor Markets Showing Further Positive Indicators

The EU is dominating the news but behind that is continued strength in US labor markets. We are seeing it in new housing demand, oil/gas drilling, auto production (new plants being built and shifts added) and elsewhere.

“Davidson” sumbits:

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The Conference Board released its Help Wanted Online Index (HWOL) this morning revealing that the trend from May 2009 continues to be strong. The release can be viewed as a pdf using this link: http://www.conference-board.org/data/helpwantedOnline.cfm

“The Supply/Demand rate stands at 2.6 unemployed for every vacancy. In May the number of unemployed was 7.7 million above the number of advertised vacancies — compared to 10 million above in the fall of 2011.

“After rising 564,000 over the last five months, labor demand dipped in May. Despite this drop, strong employer demand has created growing opportunities for both job-changers and the unemployed and has also helped significantly lower the unemployment rate,” said June Shelp, Vice President at The Conference Board. In May over half of the 50 States are now posting advertised vacancies that are above their pre-recession highs. The largest gains were in the Midwest with Michigan up 53 percent from its pre-recession high. Other Midwestern States with increases above 40 percent include North Dakota (46%), Indiana (44%), and Ohio (41%).”

As usual it is the direction and strength of the trend over the past 12mos which is important (viewed in conjunction with other labor demand indicators) and not whether a particular month is higher or lower than the previous month.

The HWOL has been a good forecaster of future employment trends and today’s report indicates that the employment indicators should be higher in the months ahead. Recent anecdotal reports of increased auto sales and housing demand support expectations of higher employment growth.

At this point in the economic cycle with investor expectations still pensive, positive economic surprises have a history of driving equity prices higher.

Capture1188 582x420 Spain, Greece, EU and Oh Yeah.....US Firms Continue To Hire

When we add this to the latest Temp Staffing Index that shows temp employment accelerating again, it is clear demand for labor is there and firms are indeed adding to payrolls. At a level of 94 the index has now passed the end of the year high levels (normally peak temp employment) for the past three years.

The index began this acceleration in early March. That correlates to a June time period in which we ought to see NFP numbers start to once again improve over current levels which have flat-lined as of late that was also predicted by the temp help index doing the same thing late Jan through Feb.  For the record this is nothing new here, we have been saying since April that we expected June NFP to start to show more improvement. Remember the index has a 3-4 month lead time.

Here is the multi-year comparison in several charts:

Capture543 624x306 Spain, Greece, EU and Oh Yeah.....US Firms Continue To Hire

Capture544 Spain, Greece, EU and Oh Yeah.....US Firms Continue To Hire

 

By: valueplays

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Todd Sullivan is a Massachusetts-based value investor and a General Partner in Rand Strategic Partners. He looks for investments he believes are selling for a discount to their intrinsic value given their current situation and future prospects. He holds them until that value is realized or the fundamentals change in a way that no longer support his thesis. His blog features his various ideas and commentary and he updates readers on their progress in a timely fashion. His commentary has been seen in the online versions of the Wall St. Journal, New York Times, CNN Money, Business Week, Crain’s NY, Kiplingers and other publications. He has also appeared on Fox Business News & Fox News and is a RealMoney.com contributor. His commentary on Starbucks during 2008 was recently quoted by its Founder Howard Schultz in his recent book “Onward”. In 2011 he was asked to present an investment idea at Bill Ackman’s “Harbor Investment Conference”.