Don't Be Shocked by Jobs Boom Next Week

From the Wall Street Journal March 25, 2010

Investors should
start readying themselves for some strong gains in the labor market.



Why?



It's because both data and anecdotal evidence point in that direction, at least
for a while.



"We are going to be hiring this year," said Joe Brusuelas , of Stanford-based
economic research firm Brusuelas Analytics . He pegs the likely gain in
payrolls at around 225,000 for March, up from a loss of 36,000 in February.



Here's the evidence:



In the first place, the government has started hiring large numbers of temporary
workers for the census. That number should peak at around 635,000 in May,
according to the Commerce Department. The jobs will be temporary, but they are
still jobs and that will likely mean increased spending in the economy and
hence likely more hiring.



Even without the census-related boost, Brusuelas said the private sector should
add about 50,000 permanent jobs a month if the economy stays on its current
trend. That trend-growth rate should edge higher towards the end of the year,
with even more jobs being added each month, he said.



Add to that further evidence hidden deep with other data series. Even though
the Institute for Supply Management 's Manufacturing Index, which tracks growth
in the factory sector, slowed in February, the sub-index for employment was
more bullish, showing three months of steady increases.



The employment sub-index within ISM's Services Index, which tracks the
non-manufacturing economy, also showed consistent gains over the same period.
The two ISM data points augur improved hiring going forward.



Anecdotally, I've seen evidence of a more vibrant job market. Here in New York
City, there has been a dramatic decline in service quality at some of the local
lunch spots. That is typically a sign that it's becoming harder for companies
either to get quality workers and/or appropriately trained managers.



In addition, not only are there now help-wanted signs in store fronts, but
there is also some rather frenetic activity among headhunters. Both things were
absent eight months ago.



On the cautious side, Charlotte-based Wells Fargo economist Adam York said the
U.S. will need to see first-time unemployment insurance claims dip into the
range of around 380,000 to 420,000 before the overall unemployment rate can be
expected to drop significantly. Initial jobless claims today fell 14,000 but at
442,000 still are at an elevated level.



Even so, don't be surprised to see some shockingly large jumps in payrolls at
the end of next week and beyond. The real question is: How long will the hiring
boom last?