Business Cycle Indicators and Employment

With the release of April employment (428K > 391K Bloomberg consensus), we have the following graph of key indicators noted by NBER BCDC.

Figure 1: Nonfarm payroll employment (dark blue), industrial production (red), personal income excluding transfers in Ch.2012$ (green), manufacturing and trade sales in Ch.2012$ (black), consumption in Ch.2012$ (light blue), and monthly GDP in Ch.2012$ (pink), all log normalized to 2020M02=0. NBER defined recession dates, peak-to-trough, shaded gray. Source: BLS, Federal Reserve, BEA, via FRED, IHS Markit (nee Macroeconomic Advisers) (5/2/2022 release), NBER, and author’s calculations.

Notice that employment continues trending upward during the first quarter, when negative GDP growth is recorded. This highlights the reasons why recession calls are not made on the basis of GDP alone.

Employment numbers were revised down slightly in previous months. Here is the official NFP series from the establishment survey (CES) compared to the civilian employment series and the civilian employment series adjusted to the NFP concept (the latter two from the household survey, CPS).

Figure 2: Nonfarm payroll employment (blue), and civilian employment (green) and civilian employment adjusted to nonfarm payroll concept (red), all in 000’s, s.a, on log scale. NBER defined recession dates peak-to-trough shaded gray. Source: BLS via FRED, BLS, NBER.

While I place little weight on the household survey for month-to-month employment developments in the aggregate, it is somewhat reassuring that both all three series are moving upward: NFP at 4.2% vs. CES adjusted to NFP concept at 5.9%, both on 3 month change annualized.

Jason Furman has more on the employment release, and its implications. The CEA discusses the data as well.