Private employment has been on a steady rebound since 2009. Now that gov’t employment has stopped its drastic decline, the overall numbers are looking better
Private employment vs Government employment
If you separate out the employment due to Government Employees from the Household Survey, an interesting pattern emerges which is quite positive. The chart below shows the trends in the three employment trends, the Household Survey is shows as a BLUE SOLID LINE, All Government Employees is shown as a SOLID RUST COLORED LINE and the difference which is called Private Employment is shown as the DASHED GRAY LINE.This Odey Cub Is Waiting For A Pullback To Buy Financials
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Recent surprises in employment gains come not from a change in the trend of hiring in the Private Employment but from the bottoming out of hiring and the slight rise in All Government Employees. During the recession government lost ~800,000 from its payrolls. This decline has now stopped and is displaying a recovery. Over all (not shown on this chart), government represents the lowest percentage of US GDP since WWII and now stands just above 18% with a defined down trend in place. Government employment which had been ~16%-17% of the Household Survey since the 1970s has fallen to ~15%. (Military personnel are not counted as government employees)
When changes occur in the economic mix of government vs the private sector one needs to break the headline reports into greater detail to grasp the investment implications. While many still wring their hands over the ‘poor’ employment numbers, it is clear to see that private economy employment has been growing since Dec 2009 and that the decline in government employment has masked its strength.
At this point in the economic cycle, many will be surprised by unanticipated employment increases. But, those who looked at the data in greater detail have long been fully invested and are likely to remain so till the economy peaks.