There are a couple of measures I pay close attention to when it comes to employment and neither is the NFP # or ADP. The measures that I follow invariably tell me the direction those will be heading.
The Temp Employment Index has surged this year and is handily over YOY 2013 comps and is above the high water marks for each of the other years going back to 2008. Being this is probably the strongest predictor of future employment (by 3-6 months). It’s impressive reading to this point in 2014 points to not only continued job gains, but possibly additional increases in the levels of those gains
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Here is a FRED chart of temp employment YOY % changes and YOY gains in NFP. You’ll notice large moves in NFP are predicated by similar moves in temp help levels. What is unknown in the most recent period is that whether or not the current sharp move up by temp help is maintained which will lead to increasing NFP numbers or if it levels out. What is encouraging here is that in either scenario we are looking at increases that approximate current levels or are higher. Either is good
Next is the HWOL index as it is the primary way people today both advertise job openings and search for work. The index since the lows in 2008 has continued to show demand from employers looking to hire additional workers. Recently the index has seemed to have stalled perhaps leading some to think employer demand is waning but a close look may give us a glimpse into the reason. New ads online continue to surge higher (massive spike in Feb) while total ads remains rather constant and NFP are seeing increasing hiring levels. The explanation for total HWOL postings then not continuing to rise given that data set is because the rate of absorption (hiring) of the posted jobs is increasing (evidence of a 6.3% unemployment rate). More evidence of this increased absorption is the supply/demand of the HWOL:
- The Supply/Demand rate for April fell below 2 (fewer than 2 unemployed for every vacancy) for the first time in over six years
If the hiring rate was not increasing given the new ad data we would be seeing total HWOL posting rising and NFP increasing at much lower levels or even decreasing.
I make no effort to predict whether or not this weeks NFP number will rise 270k, 280k or 290k as I find such exercises pointless in that whatever this week’s number is it will be materially revised after subsequent readings. Rather, I focus on what the overlying trend in the data says and these basic metrics give me insight into what that will be. That trends remains positive………