Looking skeptically at September’s unemployment rate

The unemployment rate unexpectedly fell in September by three ticks to 7.8%. Most economist had anticipated an unchanged reading or a small rise to 8.2%.

In the meantime, nonfarm payrolls rose by a muted 114,000 last month. That was generally in line with expectations given the weak economic recovery. Further, the private sector managed to generate just 104,000 jobs.

So what gives? Why the outsized drop in the politically sensitive indicator?

The unemployment rate did not decline due to discouraged job seekers leaving the job market, which has occurred in some of the prior reports.

In fact the rolls of the employed rose by an astounding 873,000 (including 582,000 part-time workers), according the the household survey!



Quirks in seasonal adjustments?
The last three years have recorded outsized gains in part-time employment September, which then washes out in October.




The BLS might want to review their statistical models.

A discouraging nonfarm payrolls report

Nonfarm payrolls rose a disappointing 69k in May, less than half what was expected; June revised downward from 115k to 77k

The unemployment rate rose from 8.1% to 8.2%.

The internals of the nonfarm payrolls number were poor.

I’m hearing some chatter that this is still weather-related payback from a mild winter?  So let’s look at some of the numbers.

· The service sector produced 218k in Feb, including 89k in professional and business services in Feb.

But in May those categories fell to 97k and -1k, respectively.

It’s hard to argue that a hiring manager in a high-rise looks out the window and checks the Weather Channel before making his/her hiring decision.

If there is a silver lining, the household survey that measures the unemployment rate showed a 422k rise in employment, but a 642k increase in the labor force produced the 0.1% increase in the unemployment rate. Pick up in June activity?

This is a volatile measure of employment and markets ignored it. DJIA futures went from -100 to -200 in the blink of an eye, and the 10-year Treasury fell from 1.53 to 1.48%.

The Fed –

This raises chatter of QE3, but the 10-yr is already near 1.5%!

If the Fed wants to get rates down, Europe and economic worries are accomplishing this. However, the action in the bond market, coupled with weakness in employment and commodities is troubling. And low rates just aren’t jump-starting growth.

That a monetary policy that focuses on asset appreciation. Still, there’s only a tenuous link between higher stock prices and consumer action. And the blunt action of Fed bond buys could reignite commodity inflation.

But if the Fed moves ahead, purchases of mortgage-backed securities may be considered, as the 30-year fixed mortgage has badly lagged the drop in the 10-year Treasury.

One last point, action in commodities and the recent “collapse” in 10-year yields is worrisome. The bond market, which does a better job than the stock market in terms of future activity, is screaming the “R” word.

Bernanke’s testimony next Thursday now becomes an even bigger market event.

Growth in nonfarm payrolls stalls

The government reported this morning that nonfarm payrolls in August were unchanged from the prior month.

That’s right – no change, zero. In the meantime, the private sector added just 17,000 jobs and the unemployment rate held steady at 9.1%, the fifth consecutive month the jobless rate has held above 9.0%.

A more formal look is available at Examiner.



Simply put, fiscal and monetary policy have their limits and we are seeing this play out before our eyes.

The president proposed and passed an$800 billion stimulus package early in his administration.

And the Fed has kept rates at zero for over two years and has pledged to keep rates low for another two years.

It has also pumped over $2 trillion into the economy in what is popularly called QE2.

The end result: very weak economic growth and a stubbornly high unemployment rate.

Euphoria to despair–weak nonfarm payroll growth throws cold water on ADP report

OK.  That might be a bit of hyperbole on my part, but yesterday’s release by ADP showing a 157,000 jump in private-sector payrolls created a fertile climate for bullish sentiment on the Street.

But today’s report by the BLS that the economy added just 18,000 jobs in June, with 57,000 coming from the private sector, suggests the slowdown in the economy continues to severely hamper job creation.  And the reaction on Wall Street has been swift, with stocks taking a tumble, as investors run to Treasuries.

Details and a more formal look are available at Examiner.



Last week I suggested that forecasts calling for a roughly 100,000 rise in nonfarm payrolls may have been a bit too optimistic.

Weekly jobless claims have been holding in an elevated range, and there have been few signs that the economy was set to emerge from its recent soft patch.

Further, businesses have clamped down on hiring amid the slowdown and will likely keep a cautious eye on their markets before bulking up on staff.



Consequently, the nonfarm payroll numbers provided by the government more accurately reflect the recent economic slowdown in my view.

And we are unlikely to see a much-needed acceleration in hiring any time soon.

Slowing economy takes toll on nonfarm payroll growth

The economy managed to create just 54,000 nonfarm payrolls in May, less than half of the scaled-back expectations following Wednesday’s disappointing release by ADP .

The government also reported that the private sector managed to add 83,000 new jobs last month.



The lack of a significant number of new jobs, following over 200,000 private-sector additions in February, March and April, is a reflection of the slowdown in an already fragile and uneven economic recovery.

As I’ve repeated often in my commentaries, weekly jobless claims have jumped and have been holding well above 400,000, and the much slower pace of new jobs should not come as a surprise.



As the chart above reveals, the nasty recession has created a gaping hole in the labor force that is far more severe than we saw in the tough recessions that marked the mid 1970s and early 1980s.

And the shallow and uneven recovery has left many wandering in the unemployment line.



Charts 3 highlights the pace of job creation that followed the end of each of the major recessions over the last five years.



Chart 4 compares job creation during the current economic recovery with those that followed the relatively mild contractions during 1991 and 2001.

Although there has been rising chatter that the current soft patch may turn into something more ominous, the latest look at the service sector by the Institute for Supply Management out today suggests that a new recession is not imminent.

Relatively stable jobless claims, though elevated, are not signaling a new contraction either.

Recent gains in employment are encouraging

But the recession created a deep hole in the job market

The Department of Labor reported that employment grew by 244,000 in April, which marks the third consecutive month that the economy has generated in excess of 200,000 net new jobs.

Adding to the upbeat tone, February and March were revised upward by 46,000.

Despite the favorable news on the employment front in recent months, the economy has failed to make a significant dent in the unemployment rate, and the total number of employed remains well below its peak.



Notably, the steep recessions of 1974-75 and 1981-82 were followed by robust recoveries, and the job market quickly recovered.

The much shallower and uneven recovery this time around has bred a significant amount of uncertainty and has delayed and slowed the rebound in the job market.



Although the recession has been over for nearly two years, the economy, which continued to lose jobs after the recession ended, just recently returned to the level of employment reached when the economy hit bottom in June 2009.

Though the improvement in job creation has been far from stellar, we can take some solace in the fact that job growth is ahead of what occurred following the mild 2001 recession.

Nonetheless, the economy appears to have hit a soft patch, which could further delay progress in the coming months. Stay tuned.

Growth in nonfarm payrolls encouraging

But more is needed

Nonfarm payrolls jumped by 216,000 in March, including a rise of 230,000 in private-sector payrolls. Further, we saw modest upward revisions to the private sector in both January and February.

March’s 230,000 increase in private-sector jobs generated by an improving economy is the second consecutive rise north of 200,000, which is the first such back-to-back increase in five years.

Given various surveys of the employment landscape, coupled with the modest drop in weekly jobless claims, it’s safe to say that the labor market is on the mend.

Still, millions of jobs were lost in the recession and more is needed to get the labor market back on track.

Most economists believe that the economy must create at least 150,000 net new jobs each month jus to absorb new entrants into the labor force.

Of course, the recession has blunted growth in the labor force, which has contributed to the decline in the unemployment rate.

Nonetheless, the expanding and broadening economic recovery is lifting job growth and I’m cautiously optimistic that a further acceleration is on tap.

The shrinking labor force and falling labor participation rate

With March’s labor report out tomorrow, a behind the scenes look at the labor force that is measured by the government’s household survey provides us with a different look at what’s happening among job seekers that we don’t traditionally see from a quick glance at nonfarm payrolls and the unemployment rate.

First, a couple of definitions are in order.  Nonfarm payrolls are calculated by the government and are released the first Friday of each month in what is called the Establishment Survey.

The unemployment rate accompanies the nonfarm payroll data but comes from a separate survey called the Household Survey.

As its name suggests, the establishment survey tallies workers and is taken from businesses and local and state governments.  The household survey, however, is a detailed questionnaire aimed at households and tells us who is working, not working and looking for employment, and not working and not looking for a job.



The chart above reveals what has happened over the last decade to the labor force – those who are working full time or part time and those who are actively searching for work but are not working – and employment – those working full or part time.

Note: Those who are retired, under 16, in prison or a nursing home, active duty, in school, or are home  because of family responsibilities are not counted in the above graph and are not in what the government calls the labor force.

The difference between the two lines gives us the number of unemployed.

As an example, the level of employment in February 2011 stood at 139,573, while the number of individuals in the labor force stood at 153,246.

The difference, 13,673, measured those who were unemployed. Divide that into 153,246 and you get the unemployment rate of 8.9%.

Simple enough? Absolutely!

What is not so simple to explain and what has puzzled economists is the steep decline in the labor participation rate, or the portion of the non-institutionalized population 16 or older that is part of the civilian labor force.

Labor Participation Rate

              (Source: BLS)

The worst recession in 70 years has clearly blunted the growth in the labor force, as some have been forced into early retirement, while others have stayed in school amid poor job prospects and still others have returned to school.

And still others, unable to find work after months of fruitless efforts, have temporarily given up the job search.  All of these factors have probably played a large role in muting the rise in the unemployment rate as well as reducing the unemployment rate to a still-high level of just under 9%.

Had the labor force continued its uninterrupted trend over the past decade, the jobless rate would now stand near 12%!

An improving economy should draw some of the discouraged workers back into the workforce, and those who have returned to school or stayed in school will eventually be drawn back into the labor force.

That should put the labor force on an upward track. Further, general population growth should also lend support.

However, recent forecasts by economists of faster labor force growth from discouraged workers returning to the job search have failed to materialize, and a lack of upward movement could present longer-term problems for the U.S. economy.

Nonfarm payrolls are reacting to growing economy

Still a long road ahead

Nonfarm payrolls increased by 192,000 last month, including a relatively healthy 222,000 in the private sector, suggesting that the acceleration in economic activity is finally beginning to spur a spate of new jobs. A more formal look at the report is available in my analysis at Examiner.

Before we start popping the corks on the champagne bottles, it’s important to point out that employment is finally back to where it was when the recession officially ended. So let's not obscure the fact that the road to recovery will be a long one.



Moreover, taking a look at the strong economic recoveries that followed the steep recessions of 1974 and 1982, job growth has lagged in the wake of the current recession amid the uneven and fragile recovery that ensued following the end of the current slump.



But economic activity and job growth are closely correlated (see chart below) and the recent spurt in economic activity is generating employment per various surveys, and further gains in economic activity are likely to translate into an acceleration hiring as anxiety over the durability of the expansion eases.



Of course, this outlook assumes there are not unforeseen shocks that would stifle the expansion.  As I’ve already detailed, $100 per barrel oil will not cause the economy to stall. One reason: the price of natural gas and coal, major forms of energy that heat homes and generate electricity, has been well behaved.

Finally, a quick look at the government’s nonfarm payroll data since the recession began is also encouraging. Private sector payroll growth has been slow to catch fire, but with the exception we saw in January, the direction has been encouraging.



According to the Labor Department, payroll employment has increased by 1.3 million from its low point last February, or an average of 106,000 per month.

Over the same period, private-sector employment rose by 1.5 million, or an average of 127,000 per month.
 
Modest, yes, but not enough to significantly take a bite out of the unemployment rate since economists generally agree that 150,000 new jobs are needed each month in order to handle new entrants into the labor force.

That’s why the puzzling decline of 2.4 million in the labor force over the last two years – likely related to discouraged workers – has played a big role in the falling unemployment rate.

Employment dependent upon strength of recovery

The economic recovery that officially started back in the summer of 2009 exited a deep and nasty recession with a whimper.

Shell-shocked and recession-weary consumers remained in hibernation for quite a long time while a slow and uneven recovery was fueled by manufacturers who were re-stocking shelves left bare by deep cuts in production and growth in China and emerging markets.

For an economy that is neither manufacturing nor export dependent, it was no surprise that the recovery appeared to be non-existent to the casual observer.



The tide now appears to be shifting in favor of a more robust expansion thanks to an improvement in consumer spending – 70% of GDP – and an acceleration in activity in the broad-based service sector.

Whether its pent up demand from purchases that were put off during the height of the recession and the early stages of the recovery, a gradual improvement in job security or a combination of both, the economic recovery that began in manufacturing is spreading.

From double-dip to rising momentum
Following a lull over the summer, growth resumed in the fall and Q4 data showed a rather impressive jump in activity, as real final sales that were buried in the advanced GDP data grew at the fastest pace since 1984!

And 2011 is off to a fast start as evidenced by strong showings in both manufacturing and service-sector surveys.  With the recovery sending out clear signals that it is broadening, growth is no longer dependent on the whims of the narrow and volatile manufacturing sector, which is greatly increasing the odds that the economy is on a firmer footing and is entering a more self-sustaining phase.

Of course, there are still headwinds to the expansion – one only has to look at the somber tone of the housing market, the lingering debt crisis in Europe and tight credit standards.  Banks, however, are beginning to loosen up a bit, as evidenced by recent data from the Fed showing that businesses loans are starting to percolate.

Job growth – close but yet so far
We’ve already seen some evidence that ADP is detecting action in the labor market, and the employment sub-components of the ISM surveys are revealing a renewed interest in hiring. Moreover, weekly jobless claims are in a downward trend, though the winter weather is playing havoc with near-term releases rendering them nearly useless at the present time.

The cautiously upbeat outlook in the job market shouldn’t come as a surprise since the historical record over the last 30 years (see chart above) shows that there is a clear link between economic growth and job growth.

The difficulty comes in pinpointing when the government’s nonfarm payroll data will begin to reflect the pick up in the economy, as January's 36,000 rise in payrolls was a major disappointment.

Though some made a gallant attempt to put lipstick on that pig, no matter how you try to spin it, 36,000 is still 36,000.

Though we have a long way to go before the economy makes a sizable dent in the unemployment rate, I'm in the camp that believes meaningful job creation is on the horizon. And when it happens, it will catch most analysts by surprise.

Employment–the long road to recovery

The economic recovery officially began in June 2009.  Manufacturing, which was pummeled during the recession, has experienced a strong recovery, and firms involved in the output of goods have added to payrolls.

The 49,000 rise in manufacturing employment in January speaks favorably to the argument that faster growth can and will create jobs.  But manufacturing, which tends to exaggerate upward as well as downward trends in the economy, makes up only a small portion of economic output in the U.S.

The service sector, which makes up a majority of economic activity, has experienced a much slower and uneven expansion, and the fruit of such a recovery has been lackluster job growth.


Note: the fast turnaround seen after month 9 came amid the temporary jobs added for the 2010 census; weakness following week 13 came as the temporary census positions came to an end. Additionally, all annual revisions released in today’s data have been incorporated.

The chart above highlights the uncertainty we’ve been seeing in the labor market, as companies continued to shed workers for nine months after the recession ended. Only in recent months has the sluggish pace of employment growth exceeded the weakness seen following the end of the mild recession of 2001.

Adding to the misery facing many of the unemployed, the level of employment is still not back to where it was when the recession ended let alone anywhere near its former peak!



For comparison purposes, the second chart highlights the much more robust recoveries that followed the steep recessions of 1974-75 and 1981-82 and the subsequent job growth.


Moving back to the present, much of the recent data is suggesting that an acceleration in economic activity that began late last year is continuing into 2011.  And continued growth will eventually encourage employment growth.

The big question is when, and I’m still optimistic that this will occur sooner rather than later.  A look at the latest ISM employment indices reveals that most firms are beginning to create new jobs.



One thing that is certain, the latest employment data will do nothing to discourage the Fed from bumping up interest rates nor encourage the Fed to rein in its plan to buy $600 billion in longer-term Treasuries.

And don’t expect fears of inflation that have been emanating from some corners to take center stage at the central bank.

Commodity prices are at elevated levels, which the Fed acknowledged in its latest statement, but with core inflation below 1% and job growth mostly lackluster, don’t expect any additional warnings on prices, which would likely be interpreted as a signal of an impending shift in policy.

Unemployment – the long hard road to an employment recovery

The unemployment rate is back near 10% and the economy barely created any jobs in November, highlighting the problem the economy faces in generating meaningful gains in employment.

So it comes as no surprise that the Fed has embarked on a new but controversial round of quantitative easing, while politicians in Washington continue to focus on ways to speed up the recovery.

Let’s take a moment then to graphically demonstrate how tough it has been for job seekers and the many who fear that a job loss may come their way.



The chart above looks at employment trends during the latest recession as well as the harsh recessions the economy entered during the mid 1970s and the early 1980s.   The unemployment rate soared in all three recessions, but job losses during the current slump have been about double on a percentage basis.

It also confirms that the uneven economic recovery, beginning in month 19, has failed to make a meaningful dent in the unemployment rate. In fact, the economy has yet to get us back to where we stood when the recession ended (clearly viewable in last chart), let alone coming even close to surpassing the peak level of employment reached when the economy entered the recession.

Jobs following recession’s end
The charts below provides a different angle and focuses on what happened after the recession was officially declared to have ended.

Recapping what was said above, the blue and red lines, which look at the 1974-75 and 1981-82 recessions, reflect a robust recovery in employment that was generated by strong economic rebounds.

But the last three recessions underscore how cautious firms have been in adding staff – blame more modest recoveries (see CHART).



The final chart focuses only on the recoveries from the 1991, 2001 and 2008-09 recessions, providing details that weren't available in the second graph.

Despite the trouble many are facing today trying to find meaningful employment, the recession that marked the start of the last decade, at least on a percentage basis, did the worst job when it came to generating new employment opportunities.  That happened following the extremely mild 2001 recession.



Still, the unemployment rate peaked at under 6.5% during that recession, offsetting some of the sting from that jobless recovery.

Disappointing nonfarm payrolls, unemployment rate

The government reported that nonfarm payrolls rose a weak 39,000 in November, far short of forecasts, while the unemployment rate rose from 9.6%, where it had been for three straight months, to 9.8%.

The increase is all the more disappointing given the relatively favorable economic data that has been coming out – please see a more formal look on Examiner.



It’s tough to explain away the lackluster numbers, though some of the sting was softened by an upward revision to September and October of almost 40,000.  And the general trend over the past few months is favorable.

It would be nice to say that the 0.2 percentage point rise in the unemployment rate was attributed to discouraged workers re-entering the labor market, encouraged by improving economic data.

But most of the rise in the unemployment rate occurred amid job losses in the more volatile household survey, which provides the data for the unemployment rate.

Action from Capitol Hill on the way?

If there is a silver lining, weak job growth should encourage stubborn lawmakers who have refused to sign on to at least a temporary extension of the Bush-era tax cuts for all taxpayers to acquiesce.

And it may also bring about an extension in unemployment benefits, which though controversial, do provide spendable dollars to those who are most likely to use the funds for every day needs.

Since much of the recent economic data has been positive, gains in the labor market should eventually be forthcoming.

Growth is the cure for high unemployment

The economy created 151,000 jobs in October while August and September were revised upward by 110,000.  The unemployment rate held steady at 9.6%.


(click chart to enlarge)

As the economy has continued to expand, albeit at a modest pace, the private sector has added jobs for ten consecutive months, including at least 100,000 jobs each month over the last four months.

Still, it takes about 150,000 new jobs each month just to keep the unemployment rate from rising. Consequently, the recent upward trend, though encouraging, suggests that any celebration at this juncture would be premature.

Structural unemployment? No way!
I am not in the camp that believes we are facing structural unemployment, or job seekers that don’t have the required skills to fill open slots. So what's the solution – a faster economic recovery!


(click chart to enlarge)

The chart above goes back to 1981 and highlights the close correlation (0.83 for those who love stats) between economic activity and job growth, signaling that a faster economic recovery would very likely translate into increased hiring by businesses.

As already mentioned, the solution is simple.

But the formula that might create a faster recovery has been elusive and may remain elusive because an economy that is thrown into a recession by a financial crisis does not mend quickly.

Rising employment and GDP growth go hand in hand

Much has been made of the fact that rising GDP has created few jobs since employment, as measured by nonfarm payrolls, bottomed at the  end of last year.  Worse, total employment remains about 400,000 below the level seen when the recession ended back in June 2009.

The problem the U.S. economy is facing is not structural unemployment, in my view, but a lack of significant economic growth, which is a byproduct of a financial crisis that was precipitated by the collapse in housing.


(click to enlarge)

The chart above measures year-over-year real GDP growth (blue line) and compares it to changes in nonfarm payrolls (red line).  Because the government releases nonfarm payrolls monthly and GDP quarterly, nonfarm payrolls are averaged in each quarter and compared with the same quarter one year ago.

For instance in the 1st quarter of 1994, GDP increased by 3.50% versus the 1st quarter of 1993.  During that same period, the average of nonfarm payrolls for January, February and March is compared to the average for nonfarm payrolls during the first three months of 1993. In this case, Q1’94 registers a gain of 2.63% over Q1’93.

Sadly, the huge loss of jobs almost seems reasonable given the severity of the 2007-09 contraction.

The 2001 recession, which was mild by historical standards, produced relatively worse losses in employment, and then was followed by a very slow recovery in the job market (see Jobless recovery).

Meanwhile, the boomerang in economic activity that ensued after the 1981-82 recession produced very robust employment growth (see chart in The recession is officially over).

Job growth will return when economic activity finally kicks into high gear. Unfortunately, the corrective action needed to spark a strong recovery in GDP has been and will likely remain elusive.

Average weekly hours, earnings reflect sluggish job market

Looking at nonfarm payrolls and the unemployment rate are two ways of measuring the health of the labor market. Less noticed but no less important are average weekly hours and average hourly earnings.

During September, average weekly hours were unchanged at 34.2 hours (see chart 1), and average hourly earnings increased by just one cent to $22.67, rising a scant 1.7% from one year ago (see chart 2).



The decline in average hourly earnings versus the period one year ago has slowed, but the lack of any significant hiring and the large pool of labor available are keeping wage increases in check.

Consequently, minor bumps in salary are hampering growth in consumer spending but is one of several factors helping to keep inflation under wraps.



Average weekly hours normally decline during a recession, just as total employment falls, because companies experience falling profits and declining sales.  In other words, firms cut hours because customers spend less money and fewer of them come through the door.

When the economy hits bottom and turns around, companies normally respond by requiring or asking current employees to work longer hours rather than beefing up staff  (chart 2 reflects such a scenario).

Why? Because most businesses don’t want to go on a hiring binge and be forced to lay off staff if the economy sinks back into a recession. Only when the recovery enters a more permanent phase does job creation accelerate. Hence, an increase in payrolls lags behind in a recovery.

This time around has been no exception, especially because growth has been lethargic.  Add uncertainty into the mix and weak consumer confidence and you have the perfect recipe for a jobless recovery.

The jobless recovery

The government reported this morning that nonfarm payrolls fell by 95,000 in September, including a 64,000 increase in private sector employment.

The chart below measures job growth during the recoveries that followed the 1991, 2001 and the current recession.  Though many were disgusted by the declaration that the current recession ended in June 2009, it does provide us with a useful benchmark.



As the chart reflects, job losses mounted for several months after the recession was officially declared over.  The total level of employment remains below – 439,000 - what it was in June 2009.

Unemployment rate unchanged at 9.6%

Nonfarm payrolls fall 95,000, private sector jobs increase

The flagging economy failed to make a dent in the unemployment rate in September, while nonfarm payrolls, which were  heavily influenced by a drop in permanent local government jobs and the continuing loss of temporary 2010 census jobs, fell by 95,000.

The private sector did manage to create 64,000 jobs, well above the ADP report released on Wednesday which reflected a loss of 39,000.



Still, the slowdown in economic activity is being reflected by the near lack of job creation.  More worrisome, nonfarm payrolls have fallen for four-consecutive months, as private companies have been unable to offset the loss in government jobs.

And private sector employment has slowed over the past two months.

A robust recovery will cure what ails the job market, but fiscal policy is being held hostage by the federal deficit and the Federal Reserve is running out of options.

Details and a more formal look at today’s report are available at Examiner.

ADP reports fewer jobs in September

ADP reported that private-sector employment fell by 39,000 in September, the weakest reading since January and below most forecasts.

Clearly the drop in private sector jobs is disappointing but talk in some corners of the media that the decline may lead to falling retail sales and the onset of a new recession are premature, in my view.

Most of the economic data is pointing to a continuation of slow economic growth and not a new slump. Moreover, the ADP private sector employment report has lagged nonfarm payrolls in recent months, suggesting that the labor market may a little less gloomy than today’s number indicates.

ADP noted that the private sector has generated an average of just 34,000 new jobs each month between February and August, well below the monthly average of 107,000 private sector jobs in the nonfarm payroll survey.

Still, most economists believe the economy must generate about 150,000 jobs each month just to keep up with population growth and prevent the unemployment rate from rising.

Since the recovery officially began in June 2009, the economy has come up well short of 150,000.

Nonetheless, if the trend in private sector nonfarm payrolls continues, we are likely to see the eight month winning streak extended to nine , though gains may come up shy of the recent average.

Although we’ll have to wait until Friday before we get a more complete view of what happened last month, what does seem clear is that the summer slowdown is manifesting itself in slower job growth.
And that’s not what job seekers want to hear.

Improvement in Job Openings first signal of improving job market

But progress likely to be slow

The job openings and labor turnover report (JOLTs) is one of those second-tier economic reports that tends to get very little attention; however, today's rise is worthy of mention given the mostly bad news we've been hearing on the labor market.

The U.S. Labor Department reported today that the job openings rate increased from 1.9% in December to 2.1% in January , the highest the rate has been since February 2009.

Although well below the 3.2% rate seen when the U.S. economy entered the recession over two years ago, the rate has edged up from the bottom of 1.9%, signaling the employers are cautiously starting to advertise new openings.

But gains may be slow, as the hire rate held steady at 3.1% and has been stuck in a narrow range for over a year.

The labor market is among the last of the economic indicators that turn positive following the end of a recession. The downward trend in weekly jobless claims has stalled, though weather and problems making seasonal adjustments might share some of the blame, while nonfarm payrolls, which have stabilized, have not turned higher in any meaningful way.

However, the increase in job openings may finally be pointing to a slow recovery in the labor market.