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!