S&P 500 – Jobs. Trends. Insight.

National Labor Demand Grows – 37,000 More Online Job Ads in April

By Charles Thibault on May 26, 2010 in Hiring Demand Indicators, Labor Market Dynamics, S&P 500 - SPY, Unemployment Insurance Claims.

Labor Demand in the United States continued to grow in April.

In the last 4 weeks, 1.35 million new job ads were posted on paid-for online job boards. This includes 158,000 postings on CareerBuilder, 157,000 on Monster, 64,000 on HotJobs, and 71,000 job ads on Dice, an IT specialized job board.

There were 37,000 more online job ads posted in April compared to March. Considering the data collected so far for May, those monthly gains have remained stable at 33,000 new online job ads.

This growth comes after a solid first part of 2010 in terms of labor demand. The US was finally able to start generating gains in employment, even if we remove temporary hiring at the Census Bureau.

Compared to January, even the number of new Unemployment Insurance Claims fell from 490,000/week to around 450,000.

Source: WANTED Analytics

However, recent growth in Hiring Demand has decelerated a bit, although it remains positive in absolute terms. April did see an increase of 37,000 online job ads – but we had seen gains of 100,000 for March, 130,000 for February, and 143,000 for January. Even the number of new UI claims showed weakness last week, rising by 25,000 new claimants.

S&P 500 Healthcare Jobs Growing 0.8%

By Charles Thibault on November 24, 2009 in Health Care - XLV.

Hiring Demand in the S&P 500 Healthcare sector has been growing at 0.8% a month on average since the bull market started in March. This is twice as fast as National Hiring Demand growth for "Healthcare Practitioners and Technical Occupations", the largest occupational group of healthcare workers tracked by the Bureau of Labor Statistics.

The XLV 'exchange traded fund' (ETF) which mimics the performance of the S&P500 Healthcare Sector Index has grown at an impressive 2.8% a month since March as well.

Sector	OCT 2005 to DEC 2007 26 months	JAN 2008 to FEB 2009	MARCH 2009 to NOV 2009
Occupation 290000 Healthcare Practitioners and Technical	2.4%	-2.1%	0.4%
Occupation 310000 Healthcare Support	2.1%	-1.4%	2.1%
S&P 500 Healthcare Companies Hiring Demand Indicators	2.4%	-1.9%	0.8%
S&P 500 Healtchcare Exchange Traded Fund XLV	0.6%	-2.1%	2.8%

It seems, however, that the XLV ETF is only "catching up" to where it should have been. The healthcare sector is one of the only sectors to have resisted the recession, and the performance of publicly traded healthcare companies should not have been so heavily discounted.

Source: WANTED Analytics

The correlation coefficient between the two has been 0.63 over the past 4 years, indicating a structural relationship between the level of XLV Hiring Demand (number of new online job ads posted by the companies comprising the XLV index) and XLV ETF returns. In fact, a regression equation indicates that for every 1% increase in XLV Hiring Demand, the XLV ETF grows by 1% as well.

WANTED: Analytics

S&P 500 Returns and Hiring Demand Highly Correlated

By Charles Thibault on October 28, 2009 in S&P 500 - SPY.

Financial Analysts can use the relationship between the number of online job ads and the S&P500 to forecast future stock market returns, as suggested by the strong relationship between labor demand and stock market performance.

Indeed, the correlation between S&P 500 returns and the number of online job listings has been 0.83 over the past 4 years.

Remember that the maximum correlation is 1, which indicates a perfect fit between two variables. What's more, a quadratic equation improves the fit to 0.88.

The economic theory is quite simple: more job openings means a better economy; fewer job openings means a weakening economy.

The following scatter plot shows yearly returns in the S&P500 index (NYSE:SPY) and year-over-year changes in the level of new online job listings ("Hiring Demand") on a weekly basis, as well as our "line of best fit":

2009-10-27 - Quadratic Fit for SPY HDI 2

Financial Analysts that currently use Unemployment Insurance Claims data in their models should note that the correlation between Hiring Demand and new UI Claims is -0.70, but, more importantly, this correlation increases to -0.76 when the one-week lagged value of Hiring Demand is used. This suggests that Hiring Demand leads UI claims and that models currently utilizing UI claims can be augmented with Hiring Demand Indicators.

S&P 500 Healthcare (XLV) – Inflection Point too Soon?

By Charles Thibault on July 6, 2009 in Health Care - XLV.

Since reporting an uptick in Hiring Demand by the Health Care sector of the S&P 500, year-over-year returns in the S&P 500 Health Care Index (NYSE:XLV) have improved in relative terms, even as Hiring Demand continues its overall downward trend.

On June 19th, 2009, the yearly return on the health care sector Index was -16.7%. This week (June 30), the Index is down only 13.6% compared to the same date last year, the best performance since October 11, 2008. Since March 5th, the S&P 500 Health Care Index is up 22%.

Source: WANTED Analytics

Hiring Demand has slipped after the spike experienced in mid-May. Year-over-year changes in Hiring Demand (based on the 4-week rolling summation of Unique New Ads) reached a peak of -19.7% on May 15, 2009. However, it slipped back down to -50.0% two weeks ago, and -45.4% last week. Despite improvement in the Index, overall Hiring Demand is still trending downward.

Upturn in Hiring Demand for S&P 500 Health Care Index Companies (Updated)

By Juli Morris and Charles Thibault on May 15, 2009 in Health Care - XLV.

Click chart to view full size

In the chart to the left, Hiring Demand(the blue line in the chart) for companies comprising the The S&P 500 Health Care Index has moved upward recently, according to the latest WANTED Hiring Demand data.

For the week ended May 2, year-over-year change in Hiring Demand based on online job ads improved from -39 percent the prior week to -29 percent (based on the count of Available Ads). For the same period, yearly returns for the Index were up two percentage points, year-over-year, from the prior week, ending at -26 percent. Read more »