Year-over-year change in jobs is holding steady

6 Jul 2012 by Jim Fickett.

Today the BLS released employment data for June. The single most important indicator of the labor market is one the newspapers rarely mention: the year-over-year change in non-farm payrolls. This indicates, without too much noise, the rate of growth in jobs and, especially important, whether it exceeds the 1% rate of population growth. In fact jobs are still growing faster than population (the last few months showed YOY growth of 1.5%, 1.3%, 1.4% and 1.4%) so, despite the desultory recovery, the employment picture is still slowly improving overall.

Note, however, that the YOY rate seems to have peaked, so we should not expect the recovery to strengthen any time soon, and it is quite possible that before long jobs growth may fall below population growth, which typically coincides with recession.

There will be some who will argue that the small month-to-month change in jobs, which is so noisy it should be ignored, implies that we are in or entering recession. So perhaps it is worth pointing out that the Aruoba-Diebold-Scotti index of current conditions, probably the best indicator of the present state of the business cycle, shows, after today's employment report, growth just a little below average:

Recession is likely enough, but there is no indication that we are there yet.