Today's disappointing BLS employment report reflects a fairly weak job market and a continuation of the "jobless recovery" that will likely continue well into 2011, maybe even into 2010. Looking back at the periods following the last two recessions, the jobless rate continued to rise for 15 months (until June 2002) following the end of the recession in March 19991, and it took 29 months, until August of 1993, before the unemployment rate fell back to the same level that prevailed at the end of recession. Following the 2001 recession, the jobless rate continued to rise for another 19 months (June 2003), and it took 32 months until July 2004 for the jobless rate to return to the same level as the month of the recession's end in November 2001. If this recovery follows the same pattern, it might be 2012 before this "jobless recovery" ends.
Several bright spots in today's jobs report include:
1. Employment in temporary help services continued to grow by 39,500 jobs in November, which is the 13th increase during the last 14 months. Since the cyclical low of 1.724 million jobs in September 2009, there has been an increase of 494,000 jobs in the temporary sector to 2,218 million jobs in November. That level of temporary and contract employment jobs is the highest since September of 2008, 26 months ago.
2. Average overtime hours for the manufacturing sector reached a 31-month high of 4.0 hours per week in November, the highest level since April 2008.
Taken together, it appears that many U.S. companies are meeting the increasing demand for their products and services by: a) using temporary and contract employees instead of hiring permanent, full-time employees, and b) using existing employees more intensely with increased overtime hours in the manufacturing sectors. Both of those factors would be characteristic of an economy that is in recovery measured by production, income and sales, but is not yet creating enough full-time permanent jobs to bring down the overall jobless rate.
Update: See the always-insightful analysis here from Scott Grannis, who writes "Despite the failure of job growth to pick up, there is no sign that it is slowing down. The economy continues to plod ahead at a slow pace. If this keeps up, and worker productivity rises at its long-term average pace of 2% per year, then we can expect to see about 3.5% real GDP growth going forward."
And here's some commentary from Brian Wesbury and Bob Stein on today's report: "Given recent data on consumer spending as well as growth in manufacturing production and construction, the underlying trend in job growth should accelerate in the months ahead."
