This Job Market Slump Started a While Ago
JUNE 6, 2016 3:52 PM EDT
By Justin Fox
The sharp May hiring slowdown revealed in Friday’s employment report took a lot of people -- including me -- by surprise. It shouldn’t have. Things have actually been on the downswing for the U.S. labor market for months, according to the Federal Reserve’s Labor Market Conditions Index.
The LMCI is a new measure cooked up by Federal Reserve Board economists in 2014 that consolidates 19 different labor market indicators to reflect changes in the job market. They calculated it going all the way back to 1976; the chart above shows its movements since the end of the last recession in June 2009. The May index, released Monday morning, showed a 4.8-point decline from April. As you can see from the chart, the index has now declined for five straight months -- its worst performance since the recession.
The index does get revised a lot. When the January number was first reported on Feb. 8, for example, it was still modestly positive. Still, since the February number was released on March 7 the news from the LMCI has been unremittingly negative. Which probably should have told us something.
Not many people were paying attention, though. Fed Chair Janet Yellen is apparently a fan of the LMCI, but I have to admit that I first learned of its existence Monday when Erica Groshen, the Commissioner of the Bureau of the Labor Statistics, mentioned it at a conference for BLS data users in New York. It was a good reminder, as were a lot of the other presentations at the conference, that the headline jobs numbers that get the lion’s share of attention -- the monthly change in payroll employment and the unemployment rate -- aren’t always the best places to look for information on the state of the jobs market.
One of the indicators included in the LMCI, for example, is employment in temporary help services, which tends to start rising and falling before overall employment does. Well, watch out: It looks like it may have peaked in December.
more...
http://www.bloomberg.com/view/articles/2016-06-06/this-u-s-job-market-slump-started-a-while-ago
