click for larger chart
Source: JP Morgan Funds
On NFP day, I usually present you with my usual schtick as to why each month’s data point is much less important than is made out. Rather than repeat that yaddayaddayadda again this month, let’s look at the really long term 20 year chart above.
A few things stand out:
• The FIRE economy — Finance, Insurance, and Real Estate sectors — led the growth of jobs over that 2 decade period. Most of these FIRE sectors continue to soften.
• Health Care continues to capture a lot of GDP, and that is reflected in job growth
• Low paying jobs in Leisure & Hospitality is a significant grower
• Manufacturing has been the most negative, shrinking ~5% over the past 20 years. This is the sector that could experience a revival
• Government sector has seen very little growth
Also worth noting: The Labor Force participation rate has now fallen back to 1985 levels — that is pre-tech boom, and before the bulge of FIRE hiring occurred.
When today’s NFP is released, instead of having a kneejerk reaction to the preliminary soon-to-be=revised data, consider putting it into the context of the longer term, bigger picture.
BLS data released at 8:30am
NFP Day: The Most Over-Analyzed, Over-Emphasized, Least-Understood Data Point (February 4th, 2011)