Job Creation Remains Weak

Job creation remains weak despite the attention grabbing headlines. Headline analysis, designed to generate clicks, has a tendency to selectively filter information. A deeper look at the numbers and trends suggests that while the numbers look good job creation remains weak.

(1) The labor force has been contracting year-over-year on a fairly consistent basis since 2009. It posted another annual contraction in March 2011. The contraction (more appropriate described as the reclassification of labor) has helped the official unemployment rate fall from 10.1% to 8.8% between 2009 and 2011.

Civilian Labor Force (CLF) And Year-Over-Year (YOY) Change


(2) Job creation in 2011 remains relatively weak in comparison to the 2003-2008 liquidity expansion. Jobs created from January to March in 2011 lags comparable periods of 2004, 2005, and 2006. A smaller contribution birth/death model, modified in 2011, could explain some of the difference between the periods.

Birth/Death Model (BDM) Contribution to Nonfarm Net Payrolls (NFP) Added/(Lost)


Headline: Unemployment rate falls to 8.8 pct, two-year low

The unemployment rate fell to a two-year low of 8.8 percent in March and companies added workers at the fastest two-month pace since before the recession began.

The Labor Department reported Friday that the economy added 216,000 new jobs last month, offsetting layoffs by local governments. Factories, retailers, education, health care and an array of professional and financial services expanded payrolls.

The second straight month of brisk hiring is the latest sign that the economy is strengthening nearly two years after the recession ended.

Source: finance.yahoo.com