US Economy Accelerates, but Hurdles Abound

Posted on November 24th, 2010

When the employment report for September was published it was generally perceived as showing that the U.S. employment situation is not improving or actually worsening. The contrary conclusion could however be reached from employment data from the household survey (See Employment Is Rising Fast) and from other indicators (See Follow up: Employment Is Growing Fast). On that basis one could also conclude that the stock market will break out of its three months trading range on the upside.

The October employment data indicated that our interpretation was right. Not only was the increase in payrolls (+151,000) much larger than average expectations, but prior months data were revised up (+110,000).   More recent data also point to a stronger economy. Thus, the latest PMI index (Oct) and Philadelphia Fed manufacturing index (Nov) were up (chart 1). The Fed manufacturing production (Oct) and the Chicago national activity index (Nov) increased (chart 2) and most other regional Fed surveys were up. Retail sales were also stronger than expected. Finally, initial unemployment claims recently broke to the downside (chart 3). (more…)

Follow up: Employment Is Growing Fast

Posted on September 21st, 2010

Payroll employment data from the establishment survey show employment growth in the private sector of less than 100,000 per month this year, leading to the conclusion that the economy is growing too slowly to reduce unemployment. In contrast the data from the less publicized household survey show employment in the private sector growing this year at almost 300,000 per month. Last month it soared 891,000 thousand.

As noted before in [Employment is Rising Fast] around economic turning point the household data are more reliable and usually lead the establishment data. For example, in seven out of eight turning points associated with the last four recessions — four downturns around the beginning of the recessions and four upturns around the ends of the recessions and the beginning of the recoveries — the peaks and troughs of the household employment data preceded the corresponding peaks and troughs of the establishment employment data. 


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