Wednesday, July 24, 2024
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Employment and Business Cycle Indicators

by xyonent
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The NFP employment report beat expectations.

Figure 1: CES Nonfarm Payrolls (NFP) Employment (bold blue), Private Employment (orange), Industrial Production (red), Personal Income Excluding Current Transfers (bold green), Manufacturing and Trade Sales (black), Consumption (light blue), Monthly GDP (pink), GDP (blue bars), all log normalized to 2021M11=0. Source: BLS via FRED, Board of Governors of the Federal Reserve System, BEA 2024Q1 Second Release, S&P Global Market Insights (Formerly Macroeconomic Advisors, IHS Markit) (6/1/Scheduled for release in 2024), and author’s calculations.

As I’ve stated in previous posts, when assessing fluctuations in the business cycle, I place almost all of my weight on the CES series.

We will introduce various employment series.

Figure 2: NFP employment (blue), Philadelphia Fed early benchmark (tan), CPS series adjusted to the NFP concept (green), Business Employment Dynamics estimated employment based on 4Q2019 NFP levels (pink), and total hours worked (red), all seasonally adjusted, logarithms for 2021M11=0. Source: BLS, via FRED, Philadelphia Fed, and author’s calculations.

Given the population control issues, the CPS adjusted series should be discounted.The Business Employment Trends series is taking a breather, even though the Philadelphia Fed’s early benchmark suggests growth will continue through December.


Alternative measures with some useful records include heavy truck sales and the Therm Rule Index.

Figure 3: Heavy Truck Sales, sa, log 2023M04=0 (black, left scale), and Real-Time Sahm Rule Index, %, (blue, right scale), and 0.5% threshold (horizontal red line). Source: BEA via FRED, FRED, and author’s calculations.

The Therm Rule indicator should be viewed as an indicator of conditions, not a predictive indicator: according to this indicator, the economy will not be in recession by May 2024.

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