{\rtf1\ansi\ansicpg1252 {\fonttbl\f0\fnil\fcharset0 ArialMT;} {\colortbl;\red255\green255\blue255;\red0\green0\blue0;\red255\green255\blue255;} \deftab720 \pard\pardeftab720\partightenfactor0 \f0\fs28 \cf2 \cb3 \expnd0\expndtw0\kerning0 \outl0\strokewidth0 \strokec2 }

ADP Non-Farm Employment Rises Slightly in Only 2 of Last 6 Months

Since January 2010, the US Job Market has been on a big roller coaster ride. Although not shown on this chart, June netted 175,000 jobs and continues on the up ramp, for now.

We moved from jobs lost in Jan-Feb 2010 to a high of 225,000 jobs added May 2010, and then saw jobs plummet back down to less than 100,000 jobs added for 3 consecutive months during the summer months of 2010.

Through the rest of 2010  and into 2011, we saw a rising trend peaking at 300,000 jobs added in February 2012, only to see them fall back to a low of 75,000 in August 2012. We recovered nicely for the balance of 2012, only to see us back into a downward spiral in 2013 still reporting positive job growth, but at much lower numbers.

If you take a look at this chart visually, you can probably see a minimum level of 75,000 net jobs and a maximum of 300,000 jobs. Over the last 3 1/2 years, we have averaged around 180,000 net jobs added per month. Most experts believe that the economy requires a minimum of 250,000 net jobs added each month to achieve a 3-4% GDP growth rate.

However, the problem is not just with job creation.  The 30% negative impact on growth should bring GDP growth down to 2-3%, but we have been fluctuating between 1-2% growth. Where is the other 1% drop? First, let’s take a look at the Labor Participation Rate.

For 2 years, the Labor Participation Rate has been in a free fall, dropping a full 1% over the period. How can we accumulate net jobs added every month for 3 1/2 years and still have a falling Labor Participation Rate over the recovery period? We believe the main reason is due to many people coming back into the labor force after taking part-time jobs. However, we are concerned about real personal income levels which have been falling dramatically.

But, we will save that for another post!

Follow

Get every new post delivered to your Inbox

Join other followers

%d bloggers like this: