Will Slowing Worker Growth Go Negative?
We have already seen job creation slow during the past year. We saw May post negative private sector worker growth during May. Yes, the streak ended. We saw 1.1 million full-time jobs lost last month and 1.3 million part-time jobs added. The difference between worker growth and job growth is the difference between the Current Employment Situation (CES) data (worker) and the Current Population Survey (CPS)(Job) data. We have seen a slower worker creation pace this year than we have seen during 2011, 2012, 2013, 2014, and 2015.
What will happen tomorrow?
Last Month we Saw a Similar Worker Contraction as we Saw during 2015. Yes, we saw contraction in the non-seasonally adjusted (NSA) CES data last month. Summer ends roughly the same time every year. Roughly because of when the data is pulled for the survey. We also shed workers during December and January on a regular basis. Christmas help is hired prior to Thanksgiving. Some companies channel their inner Scrooge and release workers prior to the end of the year. Businesses often close shops at the end of the year. The Christmas elves are not needed after the 1st of the year so lay-offs hit after the first of the year.
We tend to see workers Shed during September, October, November, December and January during economic slowdowns. There are a ton of red numbers on the M2M table. The recession years tend to reveal end of the year shedding of workers. The 0.37% drop during September was worse than 2010-2014 and comparable to 2014. It was comparable to 2006 and 2007.
The October Jobs Report Forecast Column is projecting growth during October of under 0.40%. What the SA CES number is depends upon what seasonal factor is used. Understand that we have seen growth slower than 0.40% during 2010, 2011, and 2012. The current year data is running slower than we saw during those three years. The data is not indicating that the NSA CES data should go negative, it is just that if it is going to go negative it may happen this month. If we grow at a monthly rate less than 0.40% then fewer than 140,000 workers will be reported as being added to the economy. If we grow at a rate less than 0.34% then a contraction should be reported.
Annual Job Creation is slowing. The NSA worker growth has been growing slower than 2015 this entire year. The NSA CES worker growth has been growing slower than what was recorded during 2012, 2013, and 2014 since May. We have even been growing slower than what was recorded during 2000 and 2006.This is important because those were pre-recession years. The 2000 data is even more important because we experienced the DotCom Crash during the Spring of 2000 and went into a Recession after the Election of 2000.
We are growing Slower, Annually, than we were during 2000, 2006, and 2015. If we are growing slower than these years then the growth rate, year over year, for October could be less than the 1.73% we saw during 2000 and the 1.76% we saw during 2006. This would be in line with the situation that we are growing slower than the 1.97% to 2.36% annual rate seen during 20111 through 2015. If we grow at a rate less than 1.73% then Last Year's 121,264,000 NSA CES data would come in under 123,382,000. Last Month we had 122,845,000. This is comparable to the 123,336,000 projected if we grow by less than 0.40%
It is all numbers and conjecture. Tomorrow's number is pivotal, literally. If we lose NSA CES workers then we may be on a path similar to 2001 or 2008. If we creep upward a little we could be on track for 2000 or 2007.The slowdown is coming. Will we hit the brakes or the gas? Will huge part-time growth mask the real economy?
Its the Economy.