Don’t Be Shocked by Jobs Boom Next Week
Investors should start readying themselves for some strong gains in the labor market.
Why?
It’s because both data and anecdotal evidence point in that direction, at smallest amount for a while.
“We are going to be hiring this year,” said Joe Brusuelas, of Stanford-based economic research firm Brusuelas Analytics. He pegs the likely gain in payrolls at around 225,000 for March, up from a loss of 36,000 in February.
Here’s the evidence:
In the first house, the government has started hiring large numbers of temporary workers for the census. That number should peak at around 635,000 in May, according to the Commerce Department. The jobs will be temporary, but they are still jobs and that will likely mean augmented spending in the economy and hence likely more hiring.
Even without the census-related boost, Brusuelas said the private sector should add about 50,000 permanent jobs a month if the economy stays on its current trend. That trend-progression rate should edge higher towards the end of the year, with even more jobs being added each month, he said.
Add to that further evidence veiled deep with other data run. Even though the Institute for Give Management’s Manufacturing Index, which tracks progression in the factory sector, slowed in February, the sub-index for employment was more bullish, showing three months of steady increases.
The employment sub-index within ISM’s Services Index, which tracks the non-manufacturing economy, also showed consistent gains over the same period. The two ISM data points augur improved hiring going forward.
Anecdotally, I’ve seen evidence of a more animated job market. Here in New York City, there has been a dramatic decline in service quality at some of the local dine spots. That is typically a sign that it’s becoming harder for companies either to get quality workers and/or appropriately trained managers.
In addition, not only are there now help-wanted signs in store fronts, but there is also some rather frenetic endeavor among headhunters. Both things were absent eight months ago.
On the cautious side, Charlotte-based Wells Fargo economist Adam York said the U.S. will need to see first-time unemployment insurance claims dip into the range of around 380,000 to 420,000 before the overall unemployment rate can be expected to drop significantly. Initial jobless claims today fell 14,000 but at 442,000 still are at an elevated level.
Even so, don’t be surprised to see some shockingly large jumps in payrolls at the end of next week and beyond. The real question is: How long will the hiring boom last?