In this report, we’ll review the most recent Employment Situation data and use our Leading and Coincident Employment Indexes, as well as the breakdown of Cyclical vs. Non-Cyclical jobs, to provide the clearest picture of the true labor market trends.
Starting with the headline, Nonfarm Payrolls increased by 209,000 in June. This 209k pace is the lowest since December 2020, when the economy lost jobs, so clearly, there is decelerating momentum in the headline figures.
The Coincident Employment Index has grinded down from a 3% growth rate at the start of 2022 to virtually stall speed but is refusing to break consistently into negative territory. This has been a frustrating period because the Coincident Index fell to a growth rate of 0.2% in October of last year, had a few fractional contractions in the following months, but then popped out of negative territory despite ongoing contractions in Leading Indicators.
On a longer time horizon, we can see that when the Coincident Employment Index moves into negative territory on a sustained basis, the economy is already in a recession. At present, the Coincident Employment Index is hovering just out of contractionary territory, which is why the economy has been in the imminent recession stage since last year.
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