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The LinkUp Blog The Industry's Best-Kept Secret

June 3, 2014 / Toby Dayton

Expect A 100-Year Flood On Friday; LinkUp Forecasting Net Gain of 350,000 Jobs In May

The economic debate these days, when not focused on Thomas Piketty, centers almost entirely around whether the economy, both in the U.S. and globally, is getting better or worse. As the WSJ pointed out this morning:

As stock indexes hit records last week, the bond market was waving warning flags. The Dow Jones Industrial Average and the S&P 500 both closed at record highs Friday, with the Dow at 16717.17. But bond investors have been shifting towards havens, notably U.S. Treasury bonds, a preference that often points to expectations that economic growth will falter.

The trend can be seen around the world, in the government bonds of Germany, Britain, Japan and many other countries. Demand for bonds is pushing prices up, which sends yields lower. This is disconcerting to many economists and money managers, who say the economy is rebounding after a first quarter depressed by bad weather. Better growth should stimulate demand for money, pushing interest rates and yields higher, not lower.

Falling yields are also unsettling the investment world, causing big losses for the many bond traders who bet the other way, and sowing concerns that the economy may not be as strong as people had hoped. “I am baffled and a little concerned. It makes me nervous,” said James Paulsen, Chief Investment Strategist at Wells Capital Management.

When Jim Paulsen, the most consistently bullish investor on the planet, expresses concern about the markets, it might be time to quickly head back down into the potato cellar. I’d even advise running over walking. And yet the same WSJ article indicates that Paulsen is still forecasting stronger economic growth and higher yields. Paulsen’s conflicting sentiments are well justified given the shifting winds swirling throughout the economy and the markets these days. Despite rising consumer spending and continued gains in industrial production, GDP growth actually shrank 1% in the first quarter. Most economists brushed off the negative growth as a temporary blip, perhaps weather-related, in an otherwise rosy outlook. But there remains a pervasive, nagging sense that we’re once again heading down the same rocky road we’ve travelled before. Uncertainties surround housing, inventories, the ability to sustain crazy corporate earnings, Russia/Ukraine, China, and the impact of tapering.

And in the labor market, decent job gains over the past year or so have been heavily discounted by the fact that the jobs being filled are disproportionately part-time and/or low-wage positions. Wage growth across the entire spectrum has, for the most part, been nonexistent and long-term unemployment is proving to be virtually intractable. And as we’ve pointed out in this blog over the past few months, the record for the past 3 years has been solid job gains in Q1, only to be followed by disappointing numbers in each subsequent quarter. Is this year finally going to be the year in which that cycle is broken? Who the hell knows. It’s no wonder that Paulsen and others are baffled by the current state of the economy.

Unfortunately, we’re not likely to add much clarity as to whether the tide is coming in or going out. In fact, our forecast for May is likely to further cloud the picture with our wildly bullish forecast for Friday’s jobs report from the Bureau of Labor Statistics (BLS). Despite the first monthly decline this year in new and total job listings last month, we’re predicting a net gain of 350,000 jobs in May. WTF?!?!?! We’ll explain.

Let’s start with the forecast for May.

As the chart below indicates, new and total job openings on LinkUp’s national job search engine, with an index of over 2 million jobs from 20,000 corporate websites, have risen sharply and consistently between January and April. Given that a job opening is a strong indicator of a future job being added to the U.S. economy, the gains seen on LinkUp foretold very strong job growth, which is exactly what we’ve seen for the past 4 months, capped off by a very strong net gain of 288,000 jobs in April (a number that surprised everyone but us).

May 2014 Forecast 2


With 15.9% and 7.7% increases in new and total job listings respectively in April, we are forecasting a net gain of 350,000 jobs in May. Admittedly, a forecast this bullish causes a bit of anxiety given how rare an occurrence it is to see job gains north of 300,000. It has only happened 3 times in the past 136 months.

Monthly BLS 2003-2014

With full recognition that such a number is, to some extent, the 100-year flood (or more accurately, perhaps, the once-every- 3-year flood), we are sticking with our prediction.

Unfortunately, however, the streak of consistent monthly gains in new and total job openings on LinkUp came to an abrupt halt in May, with a 7% decline in new job openings and a 2% drop in total job openings. Those declines were spread evenly throughout the country, with 40 states showing a decrease in new job listings and 38 showing a drop in total job listings.

Jobs by Sate May 2014

The picture of jobs by category is equally as sobering, with a similar drop of 6% in new job openings and a 2% drop in total job openings. Again, the vast majority of categories showed declines in new and total job listings.

Jobs by Category May 2014

Given the drop in job listings on LinkUp in May, we are predicting that job gains in June will drop from what we expect to see in May to a gain of roughly 250,000 in June. To be sure, those are still very solid numbers and would cap off a fantastic quarter with a net gain of 888,000 jobs.

Quarterly BLS 2003-2014


That would be a 100-year flood. But then again, we’ve seen equally bizarre things lately.


We will be hosting a webinar on Wednesday, June 4th to walk through our current views on the labor market, our jobs data, and our forecast for job growth through the 2nd quarter. If you would like to register for the webinar, please do so here.