March 28, 2023

The Employment Report and Business Cycle Indicators

Figure 1: Nonfarm payroll employment (dark blue), indicated series incorporating initial standard modification (light blue), civilian work adjusted to nonfarm payroll concept (red), in 000s, s.a., all on log scale. Lilac shading represents dates associated with a hypothetical economic crisis in H1. Source: BLS, and authors estimations.
Keep in mind the ongoing growth in the labor series even throughout the slowdown in GDP throughout H1, which some observers have tagged as a recessionary period.

Nonfarm payroll employment in September was slightly above agreement (263K vs 250K), revealing ongoing growth. This is the image of essential macro indicators followed by the NBER Service Cycle Dating Committee, plus IHS-Markit monthly GDP.

Figure 1: Nonfarm payroll employment (dark blue), Bloomberg agreement since 10/4 for NFP (blue +), civilian employment (orange), industrial production (red), personal income leaving out transfers in Ch.2012$ (green), manufacturing and trade sales in Ch.2012$ (black), usage in Ch.2012$ (light blue), and regular monthly GDP in Ch.2012$ (pink), official GDP (blue bars), all log normalized to 2021M11=0. Lilac shading denotes dates associated with a theoretical economic crisis in H1. Source: BLS, Federal Reserve, BEA, through FRED, IHS Markit (nee Macroeconomic Advisers) (10/4/2022 release), and authors calculations.
Amongst these, employment and individual earnings ex-current transfers are central. The work report is noteworthy in its (continued) strength.
The prelminary standard modification suggests that the labor market has actually been stronger than the official NFP series indicates. In Figure 2, I reveal the official series (blue), the indicated standard revised series (light blue), and the civilian employment series from the Current Population Survey, changed to the nonfarm payroll principle (red).

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