December BLS Nonfarm Forecast: up 75,000

By Charles Thibault on December 28, 2009 in BLS Nonfarm Employment.

The number of new online job postings continued on its positive trend in December, supporting continued improvements in the labor market situation. Based on improving Hiring Demand and positive signals from several different labor market variables, WANTED Technologies expects the BLS will announce December Nonfarm Employment gains of 75,000 workers. The BLS will release the Employment Situation Summary on Friday, January 8^th at 8:30am.

This would be the employment gain since the recession started 23 months ago. Last month, the BLS estimated that nonfarm employment shrunk by only 11,000 workers. The graph below shows year-over-year percent changes in Hiring Demand (new online job ads) and month-over-month changes in US employment (nonfarm). The blue dot represents this month's forecast from WANTED:

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Our forecast of an improvement of 75,000 in Nonfarm Employment is based on the following:

• Since the largest Nonfarm Employment drop in January (-741,000), employment losses have been receding at an average rate of 73,000 workers per month.

• Last month, the BLS announced a Nonfarm Employment drop of only 11,000. More importantly, however, both September's and October's employment drops were revised positively by 80,000 jobs. Instead of losing 219,000 jobs in September, the BLS estimates that the US lost only 139,000 jobs, an improvement of 80,000. For October, the improvement was 79,000 as Nonfarm Employment losses were 111,000 instead of 190,000. That news drove the S&P 500 index up 1.8% by 10am that very morning.

• There were 182,000 fewer new Unemployment Insurance claims this month compared to last (1,870,000 compared to 2,052,000).

• Hiring Demand (the number of new online job ads) has been consistently trending upwards over the past 9 months. On the three major national job boards (Monster, CareerBuilder, HotJobs), Hiring Demand has grown 2.6% a month on average since March and this trend was maintained in December (see graph above).

• Finally, we have shown how changes in the number of workers in the Employment Services industry (NAICS code 561300, which includes 'staffing' and 'temporary help services') lead US nonfarm employment counts both entering and exiting recessions. Over the past 20 years, employment in the 'Employment Services' industry has lead Nonfarm Employment by about 4 or 5 months. 4 months ago, the employment services industry registered its first employment gains.

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