A discrepancy occurred from 2010 onwards as layoffs went down. |
=> Change in amount of workers in the economy (blue chart) = job hires (red chart) – layoffs
A discrepancy occurred from 2010 onwards as layoffs went down. |
=> Change in amount of workers in the economy (blue chart) = job hires (red chart) – layoffs
As you can see here, the charts do match with each other and it looks like the JOLTS data is more accurate than the NFP data (which gets revised a lot). This correlation isn’t a very important one, but you can use the JOLTS data to predict the NFP data and with NFP data, you can predict the trend of the unemployment rate.
This brings me to this more interesting chart.
Here you can see the change in NFP data versus the change in unemployment rate. As you can see, whenever the NFP changes to the downside (less people get jobs), the unemployment rate of change edges upwards.
So, the key is to watch these JOLTS and NFP data and predict the curve of the unemployment rate.
Today we also found the ADP jobs numbers for the month of January 2013 and it came out to 192000 jobs. This is pretty good, but if you look at the trendline on Chart 1 we are still going down.
Payroll numbers just came out and it’s not good: 91000.
As I pointed out in this article it means we are bound to get higher unemployment numbers (even though unemployment is only 8.1% right now). This is because payroll numbers are a far better measure than the unemployment rate.
What happened? Gold and silver flew through the roof because QE3 is very probable now.
Chart 1: Silver |
Chart 2: Gold |
I came across an interesting Zerohedge article about the odds of QE3. In that article they point out that QE3 odds are based on unemployment rate and non-farm payroll numbers, which will be released in about two weeks.
Table 1: Zerohedge’s odds table for QE3 |
Actually, I think this table is redundant because a rise in payrolls (Chart 1) always accompanies a decline in unemployment rate. We will need the chart of the working-age population (Chart 2) to perform the analysis.
I will tell you the details, in this article.
Chart 1: Non-farm payrolls |
Chart 2: Working-age Population in the U.S. |