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Jobs Numbers Tomorrow Will Be Better Than Expected; Labor Market In Q3 Will Remain In Perfect Goldilocks Range; No Fed Tapering In September
On the front page of Tuesday’s New York Times business section was an article entitled, “Slowdown Is Expected, But It’s Seen As Fleeting.” Based on LinkUp’s jobs data over the past few months, combined with the strong gains in July in new and total job openings from corporate websites on LinkUp’s job search engine, we totally concur.
As the article states,
“New data from the government due out [this week] is expected to show that the economy came close to stalling during the spring quarter, which ran from April through June. But many experts say the latest slowdown is likely to be temporary. Buoyed by a healthier housing sector, a surging stock market and resilient consumer spending, they say, economic activity should rebound in the second half of 2013 and accelerate in 2014.”
Based on LinkUp’s recent data, we would add job growth to the list of positive economic indicators. While still tepid by most measures, the labor market continues to slowly but surely recover and our outlook through the 3rd quarter remains positive.
Based on the gains in new and total job openings on corporate websites in May, we are forecasting that tomorrow’s jobs report from the Bureau of Labor Statistics (BLS) will report that the U.S. added a net gain of 220,000 jobs in July. Furthermore, we predict that the numbers for May and June will be revised upward to 205,000 and 210,000 respectively. With the slight decline in the blended average of new and total jobs in June, we are forecasting a net gain of only 195,000 jobs in August, and with the strong numbers on LinkUp in July, our outlook at this point for September is very positive.
In July, new job listings by state rose 4% and total job listings by state rose 2%. (The numbers by state in the table below are slightly different than the numbers in the table above due to the particular aspects of our forecasting model. The numbers below could be regarded as the ‘raw’ data and the table above takes into account a few more data points from prior months associated with our ‘paired-month’ methodology).
While new and total job gains in July are not that significant, there are at least two positive aspects to our data. First, July’s numbers are significantly better than June’s which gives us a strong indication that job growth should remain positive throughout the 3rd quarter. Secondly, job gains were seen in the vast majority of states, a positive sign that the modest recovery is not isolated to a narrow geography.
As background, the best available indicator of a future hire is a job listing that a company posts to attract job applicants for that opening. And the best source of those job listings is the company’s own corporate website itself because it’s free for the company to post jobs on its own site, there are no old, outdated, or already-filled listings, there are no duplicate job listings, and there is no job board pollution that includes garbage such as fraudulent listings from lead-gen marketing companies, work-at-home scams, or identity theft posts. Nearly as important, there are no listings from 3rd party intermediaries such as recruiters, staffing companies, temp firms, headhunters, or search firms.
The numbers by category are even more encouraging with new job listings by category up 12% from June and total job openings by category up 4% from the prior month. Again, the job gains were seen in the majority of categories, indicating that the strengthening labor market is nicely diversified across job segments.
So now the question is what impact tomorrow’s better than expected numbers will have on the markets. The consensus forecast calls for a net gain of 180,000 jobs, and a number like 220,000 could spook the markets with the threat of September tapering. My guess is that despite a potentially turbulent morning, the markets will stabilize with the recognition that the recovering labor market remains quite fragile (lots of part-time, temporary, and low-wage jobs being added, a very low labor force participation rate still, and a long, long way to go to get back to 2007-type employment levels).
The numbers for Q3 look like they just might be in that perfect ‘Goldilocks’ range – just good enough to indicate a steadily recovering labor market but not so good that the Fed can prematurely take its foot off the accelerator. And by no means should anyone begin talking about when we should put a foot on the brake.