June 2011 Jobs Report Shows No Sign of Impending Recession

On weekend talk shows and in some blogs, talk about a “leading indicator” – temporary employment showed a decline in the June 2011 BLS jobs report (analysis here).  It has been postulated and widely suggested that the USA economy is perched at the abyss.

Whilst the economy could be approaching an abyss, using temporary employment at a “leading indicator” is old school.  Temporary employment is only a leading indicator that a recession has ended. The new normal use of temporary employment is to smooth out business cycles.

A downward trend in temporary employment tells you a business cycle is less good.

The best leading indicator of an impending recession in the employment report is transportation employment.  All the goods and people movement comes from this sector.

Historically the transport sector is not uptrending going into a recession.  Employment in this sector is less noisy – and is a much better “leading indicator” coming into a recession.

There is no question the last business cycle peaked in March or April, which corresponds to the downtrend in temporary employment.  Econintersect called this peak in its April economic forecast (analysis here).

The economy is “less good” than it was a few months ago, but the underlying fundamentals are not showing a recessionary pattern with the data we are currently seeing.

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2 replies on “June 2011 Jobs Report Shows No Sign of Impending Recession”

  1. Unemployment numbers are comprised of those that are in the job market for the past 30 days. It does not include those that have not been in the job market in the last 30 days: people who have given up looking; those that have gone off unemployment because it has run out.

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