The LinkUp Blog The Industry's Best-Kept Secret
LinkUp Forecasts Mediocre Jobs Report Friday; Stronger Job Growth This Fall Points To Tapering In December
All eyes will be on the jobs report this Friday, with none more piercing than Ben Bernanke’s. The Department of Labor’s Employment Situation Report, issued by the Bureau of Labor Statistics (BLS), will report not only how many jobs were created in August, but will also include revisions to the numbers issued for June and July. While the headline numbers for August might grab the spotlight, it is those 30 and 60 day revisions that could hold the key to what the Fed Chairman ultimately decides in regard to ‘tapering.’ Based on our jobs data for the past few months, we are forecasting that Friday’s jobs report will be tepid at best and tapering will not begin in September as most economists are predicting.
Before I get to the actual numbers, it’s worth revisiting how LinkUp’s forecasting model works. LinkUp is a job search engine that only indexes job listings from company websites. Every day, our search engine crawls the web and indexes job openings from thousands of corporate websites. LinkUp’s job search engine currently lists 1.7 million jobs from 40,000 companies throughout the country. Because we update the index every day, the job listings are always current. Just as critical, LinkUp does not include any duplicate job listings because we only pull jobs in from a single source – the company’s website itself. Furthermore, because we don’t index jobs from any job boards the way that Indeed, Simplyhired, and Wanted Analytics do, for example, our data is not polluted by job scams, work-at-home and lead-generation garbage, fraud, identity theft posts, etc.
As a result of our completely unique job search engine, LinkUp is not only regarded as the best job site on the web for job seekers, but we also possess the largest, cleanest, and most comprehensive jobs data set available. And the best indicator of a future job being added to the economy is a job opening that a company posts on its own corporate career website (where it’s free and candidates typically apply straight into a company’s applicant tracking system). The lag-time between a job opening being posted and that job getting filled with a new hire fluctuates to some degree but has stood at approximately 60 days for the past 2 years or so. So to look at the jobs numbers for June and July, we have to go back to LinkUp’s data in April and May.
In April, the blended average of new and total job openings in our index rose by 1.2%, indicating a slight rise in the net gain of jobs. In fact, in June, job growth in the U.S. rose by 188,000, a slight uptick from the 176,000 jobs that were added in May. So far, so good and we were actually the only contributor to Bloomberg’s consensus forecast that got June’s jobs numbers exactly right (prior to being revised 30 days later, the original BLS report for June was a net gain of 195,000 jobs).
But in May, new and total job openings rose slightly, indicating that job growth in July should have accelerated a bit from the prior month. In fact, the BLS reported last month that only 162,000 jobs were added in July, a decline from June’s net gain.
The 3.1% decline in new job listings certainly sets off a few red flags that all is not well with the labor market (as if it weren’t already clear that the recovery has been both anemic and sporadic), but the 162,000 number issued by the BLS last month seems a bit weak. Unfortunately, we have a very similar situation this month as we examine LinkUp’s data from June. At the beginning of the summer, new job listings on LinkUp declined 4.4% while total job openings rose a scant 2.6%. At first glance, the blended average of -0.9% indicates that August’s jobs numbers will be disappointing. But that negative outlook rests on 2 assumptions:
1) That July’s number’s won’t be revised upward (30 days ago, we predicted a net gain of 220,000 jobs in July).
2) That the lag-time between a job listing showing up in LinkUp’s job search engine and that job being filled is still 60 days.
So under scenario 1 in which the lag-time is still 60 days, July’s BLS numbers are revised up to about 200,000 (from 188,000) and the U.S. economy added a net gain of only 180,000 jobs in August. (That would reflect the slight uptick in LinkUp’s numbers in May and the slight downtick in June). Given that the economy has added an average of 192,000 jobs each month this year, anything less in August would be quite negative.
But under scenario 2, which assumes that employers are starting to increase the pace of hiring and the lag-time has shrunk to 30 days, July’s BLS numbers stay at 162,000 but the strong gains we saw on LinkUp in July (new and total job listings climbing by 6.1%) point to a really strong number in August with U.S. economy adding 262,000 jobs.
Of course, there’s also scenario 3 in which the BLS doesn’t revise July’s numbers at all and the economy, given the decline in new and total job openings we saw on LinkUp in June, added a net gain of only 145,000 jobs in August.
So there you have it – we are making the bold prediction that Friday’s jobs number will be somewhere between 145,000 and 262,000 which is just about as useful as Alex Rosenberg and Tyler Curtain would suppose it to be.
So with all that preamble out of the way, we are actually forecasting scenario 1 – that July’s numbers will be revised up to 200,000, and that the U.S. added a net gain of only 180,000 jobs in August. This is just slightly better than consensus estimates, but still a pretty weak number given that the economy has added an average of 192,000 jobs each month this year. With that data in hand, the Fed will not begin tapering in September as most economists expect. On the bright side, however, decent gains seen in new and total job listings in our search engine in July and August point to an improving labor market this Fall. And if that holds true, tapering will begin before the end of the year.
In August, new and total job listings on LinkUp rose by 3% with most states showing an increase in both.
The data for jobs by category is almost identical to the data by state, with new and total job listings rising 2% and 3% respectively and most categories showing gains in each.
Let’s hope our forecast is better than Tucker Nichol’s graphic depicted above.