As we’ve pointed out far too many times, payroll improvements are lagging far beyond the normal post recession patterns.
Nonfarm Payrolls (% change from recession end)
Source: Chart of the Day, February 10, 2004
Today, in a survey from the Business Roundtable, CEOs are saying they will finally be hiring. As the chart above makes clear, this is long overdue. As we have seen, however, there is a big difference between what people say and what they actually do:
“For the first time in at least a year and a half, more top executives plan to increase employment in the United States over the next six months than plan to cut it, according to a survey released today by the Business Roundtable, a lobbying group. Thirty-three percent of the executives said they would add jobs, up from just 12 percent in October, while 22 percent said they would reduce their payrolls.
“C.E.O.’s believe that the U.S. economy is on course for continued steady improvement,” said Hank A. McKinnell, chairman of the Roundtable and chief executive of Pfizer, the drug company.
But Dr. McKinnell added that he still did not expect job growth this year to reach the levels of past recoveries, largely because companies have become more efficient and can produce more goods with fewer hands. Asked if he expected the economy to add 200,000 to 300,000 jobs a month, as it did through parts of the 1980’s and 90’s, Dr. McKinnell said, “We’re not quite that bullish at this point.” But he added, “We’re headed in that direction.”
Even though GDP grew rapidly during the second half of last year — especially Q3 — employment growth continues to be meager. From July to January, the economy added only 56,000 jobs a month, on average — far too few to keep up with population growth.
Friday brings the highlight of the week in the February employment report, and Economists are expecting the BLS to report 125,000 – 150,000 new jobs. Though still below population growth, it would be the biggest gain since late 2000.
My friend Brian Reynolds, Chief Market Strategist of M.S. Howells & Co , notes that “While a strong employment number is possible, the higher the whisper number goes, the harder it will be to have an upside payroll surprise and the easier it will be to have a disappointment. In any event, one strong payroll number will not cause the Fed to tighten and, if new orders continue to roll over, it will become harder for strong employment gains to persist.”
Couldn’t have said it any better myself.
Chief Executives Expect to Increase Hiring, Survey Says
By DAVID LEONHARDT
N.Y. Times, March 3, 2004
Business Roundtable Releases March Economic Outlook Survey
Release Date: 3.3.04