Chart Of The Day - The Hiringless Recovery

Tyler Durden's picture

Many have opined that while the unemployment rate may be 6.6%, down from a peak of 10% three and a half year ago, the so-called recovery sure doesn't feel like one: after all so many Americans are still struggling to find work and as so many complain, employers are simply not hiring.

But how is that possible if the establishment survey tells us that the 12 month cumulative change in payrolls is now back to its ~2 million pre-recession average? Well, as it turns out, all those who complain about lack of hiring, are absolutely correct.

As the chart below shows, using the most recent JOLTS data, while historically the hires and cumulative job change numbers have tracked each other almost perfectly, in the current environment, hiring is far below where it should be if one were to believe the headline job numbers.

As even Goldman notes, "the hiring rate fell one-tenth to 3.2% and remains notably depressed relative to pre-recession levels" and Convergex' Nick Colas adds "employers added fewer new hires than in any month since June. A 2.0% dip in hiring was just the second monthly decline in the latter half of 2013, as 92,000 fewer workers started new jobs during December compared with the prior month."

What does this mean?

Well, as SMRA summarizes, the uptrend in the net turnover numbers or the nonfarm payroll since the onset of recovery was based largely on to a decline in layoffs and other separations, as oppose to robust hirings.

In other words, the US jobs "recovery" is based on less firings (and quits) than actual hirings. And remember: a business is growing when it is hiring, not when it is afraid to fire for lack of finding a qualified replacement out of a systematically impaired labor force, in which millions of people have been without a job for so long they have forgotten the bulk of their work skills, until they simply stop looking altogether and drop out of the labor force entirely, and certainly not when an employer is terrified to quit for lack of finding a better job.

Which, incidentally, also explains the record number of Americans out of the labor force: it has everything to do with the fake "recovery" in which companies refuse to hire, and virtually nothing to do with the demographics of the US population, as we (and the BLS once upon a time) have shown time after time.

And finally, for those who still harbor some hope that the last year's job prints were weather impacted, and may have been dragged lower due to cold weather in the survey week, here is a shock: the JOLTS net turnover chart which measures hires less separations, and traditionally matches the Establishment's survey as close to tick for tick as possible. Why is the net turnover number important? Because the Jolts data takes a snapshot of hires and separations for the full month, in contrast to the payroll numbers, which compares payroll counts for the pay period that includes the 12th in the month. In other words, if the weather was to blame for the atrocious December jobs print, the chart below would not show a dip. Instead net turnover was a meager 67,000 in the final month of 2013, following a 6-month string of job growth in the 150,000 to 250,000 range. It was the worst month for employment since the economy added 64,000 to payrolls in August 2012.


So much for the weather - again.