Business Cycle Indicators and Employment Report

NFP employment growth of 311K beat Bloomberg’s consensus of 205K. The number confirms the continued strength of the overall economy, at least according to key indicators, followed by NBER BCDC’s monthly GDP plus S&P Global (nee IHS Markit).

Picture 1: Non-farm employment, NFP (dark blue), Bloomberg 3/9 consensus (blue+), civil sector employment (orange), industrial production (red), personal income excluding transfers in 2012, $ (green), production and trade sales in Ch.2012$ (black), consumption in Ch.2012$ (light blue) and monthly GDP in Ch.2012$ (pink), GDP (blue bars), all logs normalized to 2021M11=0. Q3 Source: BLS, Federal Reserve, BEA 2nd Edition 2022Q4 via FRED, S&P Global/IHS Markit (nee Macroeconomic Advisors) (issue 03/01/2023) and the author’s calculations.

Given the debate about the strength of the labor market, especially as it relates to 1H 2022 performance, the following chart highlights the fact that if there was a slowdown in 2022 (especially in 2Q22), it is largely reversed.

Figure 2: Nonfarm payrolls as of February 2023 CES (blue), Bloomberg consensus as of March 09 (red square), NFP-adjusted household series (red), total number of QCEW workers covered seasonally adjusted from using log-transformed census X-13 (turquoise ) ), all in 000, sa Blue shading denotes a hypothetical 2022H1 recession. Source: BLS, BLS QCEW and author’s calculations.

Although employment growth was larger than expected, this was on the basis of downwardly revised figures for December and January, which totaled 55,000; in other words, in terms of level employment, 311 thousand means an increase of 206 thousand compared to the agreed increase of 205 thousand.

Here is another picture of the evolution of the labor market from different perspectives – total NFP, cumulative hours from private NFPs, civic employment, and private NFPs from ADP.

Figure 3: Non-farm employment from the Feb 2023 CES release (blue), total hours (green), private NFP series from ADP (brown), civil sector employment (red), all sa, in logs 2021M11 = 0. Light -light blue shading denotes a hypothetical 2022H1 recession. Source: BLS and ADP via FRED and author’s calculations.

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