This is interesting, as it is the first time since I have begun tracking the index (since ’07) that we have seen a constant reading for 8 straight weeks. This is meaningful as a typical stagnant reading before this was 4 weeks.
It shows that in fact, as they have said they would, businesses have put hiring on hold until the elections and until the “fiscal cliff” is sorted out (last week’s reading was as of 11/4). While the reality of whether or not Washington’s inability to perform even its basic function and provide a clear outlook to business has been debated, I think there is no clearer sign of that than this index. It means as we look forward, we should not expect to see material jobs growth (other than seasonal) until business has clarity.
The “Great Recession” taught many a CEO that prudence was warranted. It should surprise no one that given the current environment out there they are reluctant to expand payrolls. Pick any issue: taxes, Dodd/Frank, health care, Fiscal Cliff etc etc, and you’ll note Washington has failed utterly in giving the business world any inclination what to expect not just three years from now, but next spring. This cannot continue if anyone hopes to see more than the middling 1%-2% GDP growth we are now seeing.
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Now, Sandy. I would expect to see some pretty heavy volatility in the index in the next few weeks, so gleaning much from a weekly number will be tough. As full time workers file unemployment claims due to closed businesses, I’d expect temp help to rise as a huge number of cleanup workers are hired. This means a rise over the next 3-4 weeks is not indicative of future strength as it tends to rise through Christmas week anyway. We will have to discount readings unless they are abnormally strong and outside of what we would expect.
Here is the chart: