Along with the preliminary report for February, the BLS issued its Final Estimate of job losses for December at a loss of 109,000 jobs, up 41,000 from its revised estimate of 150,000. It lowered its January preliminary estimate down 6,000 jobs for a revised loss of 26,000 jobs. One more revision for January may still occur.

Full-size chart available on Jobs. Trends. Insight.

The unemployment rate held steady at 9.7 percent; consensus estimates had expected it to climb slightly to 9.8 percent.

© Copyright 2010 WANTED Technologies Corporation

The number of online job ads is extracted from WANTED's Hiring Demand Dashboard which tracks job counts on over 1,000 US job boards.

Workers in occupations that typically require a Bachelor's degree were hit severely though: the recession cut their number of jobs by 37.5%.

The following graph shows the number of online job ads in the United States by education level, weekly, over the past 4 years. The graph tracks "new" online job postings (as opposed to job ads that have already been seen). The blue series is the number of job ads for occupations that typically require a Bachelor's degrees. The burgundy line is the demand for jobs that typically require a Master's degree or higher. The financial crisis is marked with a vertical hash.

Source: WANTED Analytics Hiring Demand Dashboard

The number of new ads for jobs requiring a Bachelor's degree fell by almost 100,000 jobs a week from its pre-recession peak of 250,000. The overall drop was 37.5% when we compare the number of online job postings in July 2008 to the number a year later. (To put the number of online job ads in perspective, the BLS reported that 5.2 million people were being hired a month before the recession. Only 4.1 million people were being hired on average each month in 2009).

Jobs for workers with advanced degrees grew, however, and are maintaining their upward trend. Between July 2008 and July 2009, the number of job ads rose from 51,450 to 52,200 – an improvement of 1.5%.

Both series are seasonally unadjusted. The series for Bachelor's degrees dips every year at Christmas time, and there's also a slight softening in August. Notice, though, that the series for Master's degrees is much less influenced by seasonal fluctuations.

Overall, this analysis supports the hypothesis that workers with highly specialized skills are less exposed to the economic cycle. The lack of seasonal fluctuation also suggests that these specialized workers benefit from some kind of steady, immutable demand for their labor.

Demand for workers with education levels less than a bachelor's degree less fell by 32% between July 2008 and July 2009. These are not shown in the graph – the trend follows roughly the same trend as the Bachelor's degree line, although there are about twice as many jobs for workers who's educational requirements are less than a Bachelor's degree.

© Copyright 2010 WANTED Technologies Corporation

• Hiring Demand has stabilized and changes in employment will fluctuate around zero. The following graph tracks new online jobs, daily, over the past 4 months. Notice the periodic weekend dip when workers aren't at their office to post jobs. Jobs have been trending upward at a steady rate, about 0.5% a week.

• There were 10,700 more online job ads on major US national employment websites on February 15th compared to January 14th (Monster, CareerBuilder, HotJobs), a 2.4% increase in Hiring Demand. The growth rate did flatten compared to last month, but at least it has been positive/above zero for last the 4 months – labor demand is growing.

• New UI Claims are flat compared to last month. However, they were on a fairly aggressive downward trend before growing for two consecutive weeks. The S&P 500 Index also fell 4.5% during that period. Continued Claims fell by about 50,000 compared to two weeks ago, suggesting that there has been at least some absorption of unemployed workers in the past month.

© Copyright 2010 WANTED Technologies Corporation

Along with the preliminary report for January, the BLS issued its Final Estimate of job losses for November at a gain of 64,000 jobs, up 60,000 from its revised estimate of 4,000. It lowered its December preliminary estimate down 65,000 jobs for a revised loss of 150,000 jobs. One more revision for December may still occur. These revisions were also affected by Annual Benchmark Revisions, which restate the history of US employment.

The unemployment rate unexpectedly fell from 10.0 to 9.7 percent; consensus estimates had expected it to climb slightly to 10.1 percent.

© Copyright 2010 WANTED Technologies Corporation

Health Care stocks are down 2.9% over the last two weeks (XLV); Information Technologies stocks are down 9.5% over the last three weeks (XLK); and Finance stocks are down 7% over the last three weeks (XLF). The 4-week moving average of new unemployment insurance claims has gone up two weeks in a row.

Hiring in these three sectors – Finance, Health Care, and Information Technologies  – has slowed in the past two weeks too, falling off the positive trend they started in September. What's worse, year-over-year hiring improvements have swung from positive to negative in these sectors.

The following analysis confirms a great Q4 in terms of GDP growth (+5.7% annualized), but also suggests that growth rates are slowing.

Let's first take a second to make sure we're not presenting conflicting information about the labor market situation, particularly compared to the Conference Board's Help Wanted Online series which uses the "same" data as we present here (HWOL). That series uses a "mid-month to mid-month" time-frame in order to match the BLS's sampling framework which measures national employment on the 14th day of each month. In early January, we did see some positive labor market signals.  However, national Hiring Demand fell by 3.7% two weeks ago (after the HWOL sampling period closed). Since January 19th, the S&P 500 index has lost 4.3% too. This is after the S&P 500 gained 3.6% during the first couple of weeks of January on positive December UI claims data.

The following table compares year-over-year changes in sector Hiring Demand (the number of new online job ads) and weekly returns of sector Exchange Traded Fund (ETF). Sector ETFs are tradable securities which mimic the composition and returns of the different sector indices developed by Standard & Poor's. Sector indices are sub-components of the S&P 500.

Source: WANTED Analytics, Google Finance

First, let's look at the Financial sector (XLF). Notice how Hiring – measured in YoY % changes – and yearly returns on the index move in tandem. (Year-over-year analysis removes any seasonality in the data and corresponds to a reasonable investment holding period). In the past three weeks, we've seen a deterioration in hiring in the financial sector of about 8% which has been matched by a 7% fall in the sector index. Notice how the data from the past few weeks has fallen below the trend line started in September.

The IT sector has not quite yet fully recovered from the recession, probably because investments in information infrastructure is a forward looking activity – Hiring Demand is still down compared to last year on an absolute basis. That situation has worsened recently too, with year-over-year declines going from -15% on January 9th to -18% and then to -17.5% in the two following weeks. That stock market sector index has taken a hit of 9.5% over the past three weeks.

Notice how in the IT industry hiring continued to fall even though stock prices stabilized (the blue line is moving back up as the red line continues downwards). In the Financial industry (above), hiring and stock market prices recovered at the same time.

What's interesting about the Health Care sector is that this was one of the few sectors where hiring continued to be robust despite the financial crisis. In other words, that sector was fundamentally sound and hiring did not slow down even though stocks in that sector took a huge hit. It took about 4 months for the economic crisis to hit hiring in the Health Care sector (the hiring drop-off is "to the right" of the stock price drop off). Notice how, in this instance as well, the last couple of weeks of hiring are below what we would have expected had the trend continued.

All of these graphs show the same story: (1) Moderate stabilization during the summer of 2009; (2) accelerated improvements starting in September 2009, explaining great Q4 GDP growth; (3) Three weeks of Hiring Demand data that has fallen short of what we would have expected had that great trend continued, driving sector indices downward.

© Copyright 2010 WANTED Technologies Corporation

Every year, the BLS revises the entire history of US employment in what it calls "Annual Benchmark Revisions". These revisions create a break in the data series: forecasts of month-over-month changes aren't particularly useful when there isn't a 'next month' in the series, or when the data series is only a month old. This is what happens when the BLS revises its US employment time series – the old series ended, and a new, restated one begins.

Additionally, annual revisions are released at the same time as the monthly Employment Situation Summary report which contains the data we're forecasting. In other words, not only would we be forecasting a number for a series that's no longer being used, we'd be forecasting the future values of a dataset we don't have access to.

Additionally, we are expecting substantial revisions to 2009 employment numbers because of the volatility in the US economy over the past 16 months.

In combination, these three factors, have prompted us to withhold our monthly forecast:

1. The additional forecast standard error introduced by the annual Benchmarking process is 56,000 workers per month (estimated over the past 8 years). Revisions are greater during economically volatile periods: for the previous recession (2002) the benchmarking related forecast standard error was 107,000 workers per month.
2. The annual benchmarking revision process creates a dataset which we don't have access to but whose future value we must predict. It would be possible to forecast employment changes if we had access to the revised series before the release of the Employment Situation report; unfortunately revisions are released concurrently with the Employment Situation Summary.
3. Employment gains are "within two standard errors" of our forecast. When changes are around zero, there's a qualitatively different interpretation of changes in employment. For example, we wouldn't interpret two competing forecasts of -50,000 and +50,000 the same as we would two competing forecasts of +450,000 and +550,000 – even though both sets of forecasts are 100,000 workers apart. When exiting a recession, 'which side of zero' you are on is more important than your 'number', creating an asymmetric penalty response function to a forecast.

The BLS will release the January Employment Situation on February 5th, 2010, at 8:30am ET.

Several internal BLS data elements are revisited in detail during the Annual Benchmark Revisions:

• The "benchmark" employment level is revised, both nonfarm and at the industry-level. The benchmark employment level is changed based on unemployment insurance paperwork filed by businesses, which it takes the BLS about 10 months to sort through. For example, when reviewing its 2006 data, the BLS figured that it undercounted US employment levels by 800,000 workers (every month). The whole series gets shifted upwards by 800,000 workers in that instance.
• The infamous "Birth/Death" data is revised. In short, you can measure changes in employment by looking at how firms in a sample are adding/shedding workers. But as the BLS mentions: "There is an unavoidable lag between an establishment opening for business and its appearing in the sample frame and being available for sampling. Because new firm births generate a portion of employment growth each month, non-sampling methods must be used to estimate this growth." In other words, if there are a lot of "business births", you will have missed quite a few new workers if you only used your original sample of businesses, so you need to circle back, find those new businesses, and add those new workers into your employment counts.
• The seasonal adjustment parameters are also revised. Seasonal coefficients should be stable through time. However, seasonal coefficients are themselves estimated through models whose input data is seasonally unadjusted data. Grossly put, seasonal adjustment answers the question "what are the seasonal correction factors that will make the overall data process as smooth as possible?". If a better correction factor is discovered this year, all historical data gets re-calculated with this improved seasonal correction factor.

Let's review in more detail exactly how the annual benchmarking process causes forecasting issues.

1. Additional Forecast Standard Error:

Over the past 8 years, we can look at how the annual benchmark revisions have affected estimates of month-over-month changes in US employment. What's important to note is that the error introduced here has nothing to do with changes in the overall level of US employment (the benchmark revision). WANTED does not forecast US employment levels (like ADP). WANTED explicitly forecast changes to US employment levels. In other words, there's a difference between:

EMP_t and      ΔEMP_t = EMP_t – EMP_t-1

The benchmark revisions affect EMP_t, not ΔEMP_t. How do benchmark revisions affect "month-over-month" changes if the overall series is going up or down some "fixed" amount? The details are in the BLS' explanation: "Employment estimates for months between the most recent benchmark and the previous year's benchmark are adjusting using a wedge-back procedure. The wedge procedure assumes that total estimation error accumulated at a steady rate since the last benchmark". In other words, the BLS was off by 800,000 workers in March 2006, so they pro-rated that difference over time to hit the correct employment number at the benchmark month. That pro-rating means that estimates of over-the-month employment changes are also affected; the series isn't "bumped by a fixed amount for all months".

Mining the last 8 years of revisions, we've found that the average monthly forecast standard error introduced by the annual benchmark revision process is 57,000 workers (we treat the BLS's "first result" as a forecast of its own final revised numbers). IF we add that to the normal forecast standard error of 78,000 (normal in the sense that that is the standard error the BLS has "with itself" between the first preliminary release and the third and final release), the forecast standard error caused by the benchmarking process is 135,000.

Remember from the basics statistics course that "two standard errors" produces a 95% confidence interval – the 95% confidence interval around the forecast is now +/- 270,000. This is quite large.

What's more, during the last recession (2002), the benchmark revision caused an additional forecast standard error of 106,000 workers per month, almost double the usual. Given that we spent 2009 in a recession, we're expecting that the BLS will revise its data more heavily now than it would if the economy had been more stable.

2. Short-Term and Long-Term Dynamic Processes:

It's hard to take issue with BLS revisions, especially when they're trying to provide the most accurate employment data possible.

We can take issue with the timing of the data release, however. The historical revisions are released at the same time as the Employment Situation Summary. We attempt to forecast the numbers in that report, but the revisions and the data we're supposed to forecast will appear at the same time.

Had the revised data been made available, say, two weeks before the release of the Employment Situation, forecasters could re-calibrate their models. Indeed, forecasting models rely on the short-term dynamics of the BLS series. Our model has an autoregressive AR(p) component – the forecasting equation uses recent over-the-month employment changes. Relying heavily on the last few months instead of year-long trends can be risky. However, econometric analysis shows that using the last three month's of data has the greatest predictive power. If using 14 months of data were better, we'd use that and the revisions wouldn't be as big of an issue. But short-term movements are critical for forecasting. The hiring cycle – about 8 to 12 weeks from post to hire – also means that this variable's estimated effect has three months impact. The fact that the new series is revealed at the same time as the number we're supposed to predict is difficult: we don't have the new series to forecast from, and our forecast would be based on a data series which is no longer applicable.

To complicate matters, our models look at the "historical interaction" of changes in UI Claims and Hiring Demand with overall employment. Changes to data can affect how our statistical models estimate the effect of changes in Hiring Demand on US employment. In other words, new data can produce new regression coefficients which in turn change the forecast.

3. Qualitative Interpretation of Employment Gains:

We're at the end of a recessionary period (hopefully), and market watchers are looking for anything that could signal the end of economic contraction.

Our estimate, with the added forecast standard error generated by the Benchmark Revision Process, has a 95% confidence interval which includes zero. If 2002 is any guide, the normal forecast error associated with this month's forecast is +/- 215,000 (plus or minus two standard errors).

When we're at the point where the economy stops shrinking and starts growing, there's a qualitatively different interpretation of the change in employment. As soon as those changes move from negative to positive, expectations on the state of the economy will shift. For example:

- 50,000 jobs = recession continues

+ 50,000 jobs = recession has ended.

To reiterate on the example above, employment gains of 450,000 or 550,000 workers both represent "robust growth". But both sets of forecasts listed here are 100,000 workers apart (+450/+550; -50/+50).

Our forecast, taking into account the large forecast error caused by the Benchmark Revision, straddles both sides of "zero".

So, given that the benchmark revision process for 2009 is likely to produce series changes that are larger than usual and that we don't have access to the series we're supposed to forecast, we think it is prudent to withhold our forecast this month.

© Copyright 2010 WANTED Technologies Corporation

December and January employment data is highly volatile in terms of seasonal fluctuations. Job ads usually drop heavily during Christmas-time and then pop back up in January.

What's more, there's something we call "the January bounce" – not only does January Hiring Demand come back from the Holiday slump, it usually jumps above previous December levels. New budgets are usually the source of this "January Bounce" – there's a sort of pent-up demand for labor that's waiting for a new budget cycle to kick in.

During the last week of December, UI Claims benefited from a smaller than expected seasonal dip in Hiring Demand (UI claims improved by 22,000). This week, however, UI Claims suffered from a smaller than expected January rebound in Hiring Demand.

The two tables below show historical December/January seasonal fluctuations, compared to what we've seen so far this year.

Whereas we expected Hiring Demand to drop around 28.2% at the end of December because of the Holidays, it in fact dropped only 19.7% – this is what drove new UI claims down by 22,000 new claims. We were expecting a 24.8% jump in Hiring Demand this week, yet we only saw a 21% jump – and UI claims rose 11,000. (We label the UI claims as "Improvements" in the table below : a negative sign in front of UI changes is actually a good thing, as there are fewer unemployed, so the sign has been flipped momentarily to facilitate interpretation…). It could be that the current economic climate "dampens" seasonal movements. The good news is that over the past couple weeks we've still seen a net improvement of 11,000 new UI Claims  (22,000 for last week minus 11,000 for this week's release). (The bounce in 2008 was a little bit more spread around. The difficulty in seasonally adjusting weekly data is were "how exactly" a holiday falls matters greatly. January 1st falling on a Friday has a different effect than if January 1st fell on a Wednesday, for example – that entire week may have to be discounted more heavily in terms of seasonal adjustments).

Table : December/January Hiring Demand Seasonal Movements

Source: WANTED Analytics data

In 2006 and 2007, Hiring Demand rebounded by over 55% in the first two weeks of January. January 2008 was the start of the recession, so the bounce was less pronounced at 51.7%. For 2009, the financial crisis had just struck, and we saw a measly bounce of 35.2% . We'd need a jump of over 30% for the second week of January this year to compensate for last week's soft rebound. This is possible, but we're more likely to see something around 25%.

Table : January Hiring Demand Rebound, Historical

Source: WANTED Analytics data

Below is a 4-year Hiring Demand time-series, where a small horizontal hash has been inserted to show the break between the first and second week of January. This coming week will be a clear signal of how businesses will hire in 2010, as new budgets are rolled out and hiring activity finds its way to online job boards.

Source: WANTED Analytics

(**: WANTED Analytics is a highly flexible data querying tool. The sites which are used to construct Hiring Demand Indicators can change, depending on, for example, significant price changes for a job board. If a job board drops its price by 50%, the rise in online job ads isn't macroeconomic, rather it's a price-elasticity response to cheaper advertising. Such modifications were carried out for this week's analysis, and the time-series graph above is not directly comparable to those seen in previous posts).

© Copyright 2010 WANTED Technologies Corporation

Forbes also released a short-list of runner-ups. This week's Advertiser Watch feature focuses on these companies.

Besides solid financial performances, these companies have one thing in common: they had stable Hiring Demand through the recession, and their hiring has picked up substantially since March as well. Even though most companies did slow their hiring once the financial crisis hit, these companies maintained adequate levels of hiring compared to what was seen before the recession.

Let's start with the winner: Monsanto (NYSE:MON).

Forbes clearly knows that its choice is controversial : "[Monsanto] has been the object of vicious criticism. In the first round of attacks the company was portrayed as the Satan of agriculture for daring to modify the genes in corn and soybeans. That people have been selecting plant genes for 5,000 years was no defense; Monsanto's gene-splicing threatened the world with ecological catastrophe." Forbes even titled either article "The Planet Versus Monsanto".

Capitalism, however, is not an exercise in popularity. The elements that made Monsanto a winner were its market dominance and financial performance:

• [A] the vast numbers of farmers who prefer its seeds to competing products.
• The company has a $44 billion market value.
• IMonsanto sold $7.3 billion of seeds and seed genes, versus $4 billion for second-place DuPont.
• Monsanto netted $2.1 billion on revenue of $11.7 billion for fiscal 2009.
• Its sales have increased at an annualized rate of 18% over the last five years.
• Its annualized return on capital has been 12%.

Forbes did note, however, good news can sometimes be bad news: "The company has something too close to a monopoly in some seed markets" with the effect that the "Justice Department is looking broadly at competition in agriculture–and is asking questions about Monsanto's practices in particular."

Now to its hiring behavior. The spikes in Hiring Demand at Monsanto are caused by new jobs on AgCareers, an agriculture-specific job board. Monsanto was hiring at least 25 Agricultural Technicians a month during the recession, which compares favorably well to the 2006/2007 period. We do see a drop in Oct 2008, but Hiring Demand now is about the same as before the recession, and in fact spiked in Q4. This is a good sign for Monsanto shareholders.

Source: WANTED Analytics

According to Forbes, "Over the past five years, Coach has posted average earnings-per-share growth of 28% and, according to Thomson Reuters I/B/E/S forecasts, will maintain 15% profit growth over the next few years. Coach delivered an 85% return to shareholders over the 12 months, including dividends". So financial considerations do lead the way here.

However, Forbes also stated that "Handbag and accessories retailer Coach has weathered the downturn by expanding its offerings of lower-price luxury goods." Such a strategy seems to be driven by the fact that over the past 4 years, Coach (NYSE:COH) has hired more Market Research Analysts than any other occupation, including Retail Buyers/Purchasers. That heavy market research focused strategy seems to have paid off.

Source: WANTED Analytics

Salesforce.com (NYSE:CRM) made the short-list because "Salesforce.com's revenue is up 24% over the past year to $1.24 billion. Operating income rose even faster, from $58.5 million to $105.8 million."

What's interesting to see is that Hiring Demand at SalesForce.com has remained fairly stable as well, despite the slight recessionary dip. It never really stopped hiring Computer Specialists or Advertising Managers, a sign that it thought its business was on the right track.

Its stock price has tripled in the past year.

Source: WANTED Analytics

Forbes included DirecTV (NASDAQ:DTV) on its short list because "Despite the tough economy, satellite television outfit DirecTV increased its subscriber base 6% to 18.4 million through the first nine months of 2009. Revenue was up 8% to an estimated $15.6 billion"

The October 2008 spike in DirecTV Hiring Demand was caused by a recruitment binge for "Telecommunications Equipment Installers" on Monster.com, which coincided with a year-long rally in its stock price. In other words, DTV got ready for a surge in subscribers, and its revenues/stock price followed that anticipated increase in demand for its products.

Source: WANTED Analytics

Hormel foods (NYSE:HRL), the makers of SPAM, made the short list because "net income in 2009 rose 20% to $343 million, despite a 3% drop in revenue to $6.5 billion."

An interesting component of Hiring Demand here is that this company does not seem to advertise for jobs much online. Hiring Demand did drop slightly at the end of 2008, but has been rebounding back up since the summertime.

Source: WANTED Analytics

Another interesting pick was Netflix (NASDAQ:NFLX). According to Forbes, "For the first nine months of 2009 revenue was up 22% to $1.2 billion and net income was up 41% to $85 million" there.

It's Hiring Demand has been pretty much stable. There did seem to be a decline in early 2009, but that's only because of a run-up in hiring. Netflix was hiring just as much during the recession as before. It mostly hires for First-Line Supervisors of Production Occupations (i.e. warehouse/shipping managers) and Computer Software Engineers. Tracking the hiring of both those occupations is a good gauge of Netflix business performance.

Source: WANTED Analytics

T.Rowe Price (NASDAQ:TROW) "provides domestic and international equity funds as well as taxable, tax-free, and international bond funds" according to its website. Its stock price took a major hit, as did Hiring Demand, but Forbes likes this company because "a catalog of inexpensive mutual funds helped [it] rope in clients and keep them happy in 2009. Assets under management (nearly $370 billion) popped 33% in 2009, besting the recovery pace of larger (and more expensive) competitors".

Hiring at T. Rowe Price has been inching up slowly, but its stock price has more than doubled.

Source: WANTED Analytics

Finally, we look at Texas Instruments (NYSE:TXN). Texas Instruments "is fast grabbing market share in the $30 billion analog chip business, translating real-world signals into ones and zeros digital computers can understand. Analysts expect TI revenue will fall 17% to $10.4 billion in 2009, from $12.5 billion in 2008, rebounding to just $11.6 billion by the end of 2010. But gross margins should climb to 52% in 2010 from 48% in 2008."

Its Hiring Demand has tracked its stock price performance quite closely. Notice how hiring for Electrical Engineers and Computer Software Engineers nice and steady during the first part of 2009.

Source: WANTED Analytics

© Copyright 2010 WANTED Technologies Corporation

The unemployment rate held at 10.0 percent — consensus estimates had expected it to rise to 10.1 percent.

The economy has shed 7.4 million jobs since the start of the recession in December 2007.

Along with the preliminary report for November, the BLS issued its final estimate of 127,000 job losses for October, a worsening of 16,000 from its revised estimate of -111,000. It revised its November preliminary estimate up 15,000 jobs to report gains of 4,000 jobs, which is the one piece of good news from the report. One more revision for November is in the works.

The "culprits" this month were deviations from trends in the Construction industry and in the "Professional and Business Services" industry. Employment losses in the Government sector also contributed to this month's employment declines.

The table below shows how the Construction industry slipped in December, and how employment in the Professional and Business Services industry also fell below trend:
- ∆ is the change in employment. This is what the BLS usually reports on and what interests stock markets.
- ∆2 is the "second difference" in employment changes. It is the change in the month-over-month change in employment. This measurement is useful in estimating trends because it measures "relative improvements or losses".

So you can see that in the Construction industry, job losses were subsiding at a regular pace : ∆ = -79, -69, -66, -53, -56, -27 until we hit -53 this month, which is a deviation from the improvement trend (positive numbers in the ∆2 column).

And where the Professional and Business Services industry seemed to be gaining steam with job gains of -101, -31, -6, 24, 33, and 89 thousand workers, that industry only added 50 thousand workers this month. That's a relative drop of 39,000 in the trend after several months of consecutive improvements (see ∆2 column there). In other words, we didn't see the "lift" from that industry that we'd been expecting, contributing to overall employment shrinking.

The government sector, which is a little bit more volatile (less smooth ∆2), dropped 21,000 thousand workers which didn't help either.

The Wall Street Journal suggested this morning that bad weather may have been a determining factor in these employment drops. That hypothesis does have a little bit of support given the losses in the Construction industry. The Construction industry is sensitive to harsh weather as construction sites can shut down during storms.

© Copyright 2010 WANTED Technologies Corporation

This news also confirms our expectation that the Bureau of Labor Statistics will announce increases in levels of US employment for December.

The correlation between the number of new online job postings (Hiring Demand) and unemployment insurance claims has been -0.72 over the past 4 years. As more new online job ads appear on the internet, more people can find work, and fewer must file for unemployment insurance – hence the <negative> sign on the correlation coefficient. What's more, the correlation improves to -0.80 when looking at the one-week lagged value of Hiring Demand, supporting the hypothesis that Hiring Demand leads UI claims by a week. (Remember that the "best correlation" possible is -1.0 when two variables move in opposite directions).

Given the strength and robustness of this relationship, we can forecast changes to UI Claims data using the number of new online job ads. WANTED Technologies predicts that new UI Claims will fall by 18,000 on a seasonally adjusted basis for the week ending January 2^nd.

The following scatter plot, where each dot represents a weekly data point, shows the structural relationship between new UI claims and the number of new online jobs ads. It is this relationship, estimated in an econometric model, that allows us to produce a forecasted value.

Source: WANTED Technologies Hiring Demand Indicators

© Copyright 2009 WANTED Technologies Corporation

Source: WANTED Analytics

Unitedhealth Group (NYSE:UNH) has shown consistent upward trending in both the number of new online job ads and its stock price.  The correlation between Hiring Demand and Unitedhealth stock price has been 0.47 since the start of the year. Unitedhealth Hiring Demand has grown 5% this month, leading into the normal seasonal dip seen in late December. Not surprisingly, the top occupations that UNH posts for are "Medical and Health Services Managers" and "Registered Nurses". "Computer Systems Analysts" come in third.

Graph: Unitedhealth Group Historical Hiring Demand

Source: WANTED Analytics

Hewlett-Packard (NYSE:HPQ) has seen a steady rise in its stock price supported by increasing levels of Hiring Demand. HP is posting almost twice as many jobs this month compared to its historical monthly average (89% more). Hiring Demand for "Computer Systems Analysts" spiked in November.

Graph: Hewlett-Packard Historical Hiring Demand

Source: WANTED Analytics

Liberty Mutual (privately held), an insurance company, has seen steady Hiring Demand growth over the past 4 years. Looking at the 4-year monthly time-series graph, it is clear to see how the company has shown stable growth since December of 2005. "Insurance Sales Agents" are the most hired-for position at Liberty Mutual.

Graph: Liberty Mutual Historical Hiring Demand

Source: WANTED Analytics

Gap Inc. (NYSE:GPS) stock was hit pretty hard during the recession, losing half its market capitalization. Since March, however, Gap Inc stock has moved back into the $20 range. Hiring Demand at Gap has been 60% stronger over the past month compared to its one-year average, despite the usual seasonal drop in Retail Hiring Demand that starts in late October. Its stock price has softened by 15% ($3) since the first week of November, however.

Graph: Gap Inc. Historical Hiring Demand

Source: WANTED Analytics

Finally, we look at Yahoo! Inc (NASDAQ:YHOO). Hiring Demand at Yahoo also has a strong December seasonal component, but its Hiring Demand has been growing nicely since April, and is almost back to pre-recession levels. "Applications Computer Software Engineers" and "Marketing Managers" are the two most advertised-for positions at Yahoo. The correlation between Yahoo stock price and its Hiring Demand has been 0.35 over the past two years, but that relationship improves to 0.64 when looking at the past year only. Its Hiring Demand is now 125% greater than its one year average, suggesting future gains in its stock.

Graph: Yahoo! Inc. Historical Hiring Demand

Source: WANTED Analytics

© Copyright 2009 WANTED Technologies Corporation

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:

Full-size chart available on Jobs. Trends. Insight.

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.

© Copyright 2009 WANTED Technologies Corporation

Source: WANTED Gazelles Report

JP Morgan Chase (NYSE:JPM) has appeared on this feature several times. It's Hiring Demand grew considerably during 2009. In fact, the number of online job ads grew at an average weekly rate of 1.1% before the current seasonal November/December dip. Over the same time period, it's stock price grew 1.8% a week; it's stock is now worth about three times what it was in March. For the week starting December 6th, JP Morgan Chase Hiring Demand doubled, moving from 1,365 to 2,521 new job ads.Graph: JP Morgan Chase Hiring Demand & Stock Price, 4 Years, 4 monthsSource: WANTED Analytics.

Source: WANTED Analytics

International Business Machines has seen its Hiring Demand grow consistently since the middle of the summer. In fact, IBM is now posting ten times more job ads now than it did five months ago (500 ads compared to 5,200 for the week of December 6th). Its stock price has grown 23% since then.

Graph: IBM Hiring Demand & Stock Price, 4 Years, 4 months

Source: WANTED Analytics

Hiring at Microsoft Corporation has been growing since March (NASDAQ:MSFT). It has mostly been hiring for "Applications Engineers", but "Marketing Managers" come in an interesting second position, ahead of other IT positions such as "Computer Systems Architects" or even "Computer Systems Analysts". For the week of November 22 2009, Microsoft fell just 5 job postings short of its 4-year Hiring Demand high of 1,017 online job ads.

Graph: Microsoft Corporation Hiring Demand, 4 Years, 4 Months

Source: WANTED Analytics

Cintas Corporation (NASDAQ:CTAS) appears on our Gazelles report with a spike in Hiring Demand during the week of November 22nd. During that week it posted 635 jobs, 50% more than the week before. According to its website, "Cintas designs, manufactures and implements corporate identity uniform programs. Cintas operates 390 facilities in the U.S. and Canada, including four manufacturing plants and eight distribution centers that employ more than 30,000 people." Its most advertised-for position is "Wholesale and Manufacturing Sales Representatives", with 665 such online job ads in the past quarter.

Graph: Cintas Corporation Hiring Demand & Stock Price, 4 Years, 4 Months

Source: WANTED Analytics

Finally, AMCORE Financial (NASDAQ:AMFI) is, according to its website, a "multi-bank holding company with subsidiaries which perform commercial banking operations, credit card services, insurance services, [and] investment banking." It was a top gainer in today's trading by gaining $1.50 (not shown in the graph below which has stock prices at the week's end). It trigerred a Gazelles alert by posting 22% more jobs this month than its one-year historical average. Its stock price seemed to be quite low given the amount of hiring it continued to do after the financial crisis of October 2008.

Graph: AMCORE Financial Hiring Demand & Stock Price, 4 Years, 4 Months

Source: WANTED Analytics

© Copyright 2009 WANTED Technologies Corporation

The correlation between the number of new online job ads (Hiring Demand) and unemployment insurance claims has been -0.72 over the past 4 years. As more new online job ads appear on the internet, more people can find work, and fewer must file for unemployment insurance – hence the <negative> sign on the correlation coefficient. What's more, the correlation improves to -0.80 when looking at the one-week lagged value of Hiring Demand, suggesting that Hiring Demand leads published measures of labor market dynamics. (Remember that the "best correlation" possible is -1.0 when two variables move in opposite directions).

Given the strength and robustness of this relationship, we can forecast movements in the seasonally adjusted value of new Unemployment Insurance Claims: WANTED Technologies predicts that new UI Claims will fall by 6,000 on a seasonally adjusted basis for the week ending Dec.19.

The following graph shows the historical relationship between the number of new online jobs and new Unemployment Insurance Claims, on a seasonally unadjusted basis.

Full-size chart available on Jobs. Trends. Insight.

© Copyright 2009 WANTED Technologies Corporation

On a seasonally unadjusted basis and considering the entire month of November, Hiring Demand fell by only 2% compared to October – seasonal movements usually drive down Hiring Demand by 15% from October to November.

We're expecting new job ads, unadjusted, to fall dramatically next week leading up to the Christmas holidays.

Graph: Fortune 1000 Hiring Demand, Monthly, Weekly (4 years)

Source: WANTED Analytics

Certain industry groups seem to have recovered from last year's crisis. "Business centric" economic centers are peforming well, including the 'Banking' (Credit Intermediation), 'Insurance', and 'Office Supply' sectors. Consumer facing industries are still down compared to last year, including  'Consumer Goods' and 'Electronics and Appliance Stores'. ('Employment Services' is down compared to last year, but is up on the quarter)

Table: Fortune 1000 Hiring Demand, by Industry Group (NAICS), Prior Year Comparison

Source: WANTED Analytics

Hiring for the largest 1000 American corporations did take the usual November seasonal hit this year, except in the Washington DC market, supporting previous articles pointing towards Washington's positive employment situation.

Graph: Fortune 1000 Hiring Demand, by US Metropolitan Area

Source: :WANTED Analytics

© Copyright 2009 WANTED Technologies Corporation