–Unemployment Rate Probably Going To Stay High For A While
By Brai Odion-Esene
WASHINGTON (MNI) – Jesse Harriott, head of Economic Research at
Monster.com in an interview with Market News International said if
recent upticks continue in the jobsite’s employment index — which
measures online job demand — then a growth in U.S. payrolls can be
expected in 2010.
Harriott noted the fourth quarter of 2009 saw a slight pickup in
online recruitment activity, and more recently the last two months have
seen positive year-over-year growth. This the first time that has
happened since December 2007. “To me it’s an encouraging sign,” Harriott
said.
He stressed that the employment reports by ADP and the government
on the one hand, and the Monster Employment Index (MEI) on the other,
“measure two different things.”
While the former focus on when someone gets hired, Monster’s index
measures the intention to hire, thereby acting as a leading indicator of
what the payroll numbers might do, he said.
If the trend continues — where the MEI sees more monthly increases
— “then I think in 2010 we will see payroll growth added,” Harriott
said. The unemployment rate, however, is probably going to stay high for
a while.
There is a chance the unemployment rate — projected to remain at
9.7% — could stay “muted” going forward, he said, as people who see an
improving labor market re-enter the job arena and swell the numbers of
those looking for work.
However, he continued, it is important to take a long-term view of
the employment numbers, pointing out increases in some occupations that
may signal some future recovery. Harriott cited a rise in
consumer-spending related jobs in areas like retail as an example.
The MEI had a monthly rise of one point in March, as employers
continued to expand hiring efforts at the end of the first quarter. The
annual growth rate in the MEI accelerated in March, with the current
online demand level 6% above where it was a year ago.
In its national employment report published Wednesday, ADP reported
nonfarm private employment down by 23,000 in March, the smallest since
employment began falling in February 2008. Economists’ expectations for
Friday’s U.S. nonfarm payrolls report center on an increase in March
employment of about 200,000 jobs.
Looking at the long-term trend, Harriott continued, both the ADP
and government numbers have been getting increasingly better
month-to-month.
In a speech to business leaders in Hartford, Connecticut,
Wednesday, Atlanta Federal Reserve President Dennis Lockhart referred to
unemployment as “the most vexing current problem coming out of the
recession.” It is “a daunting economic challenge,” he said, “of the
period ahead.”
Lockhart blamed the current slow pace of job gains on the slow pace
of job creation, as opposed to high layoff rates. Asked to comment,
Harriott said, “The point there is valid.” Millions of jobs were lost
during the recession and the U.S. has not returned to a point where the
damage has been erased.
However, “It appears as though — from the reports that we have —
there are glimmers of hope,” Harriott said. “In other words, the trend
is starting in the right direction.” That said, “there is a long way
still to go.”
Despite improvements in the employment picture for some parts of
the U.S., he said the uptick is still off of levels where they had
peaked in 2006 and 2007.
Productivity will need to increase first, Harriott said, and there
are signs that already happened towards the end of last year. This will
lead to a jump in temporary hiring (up 48,000 last month), and then the
creation of full-time employment.
This, however, is yet to happen with Harriott saying it might be
too early to make that judgement.
Asked if there was any clear impact from the government’s Recovery
Act on the improved Monster index, he responded that the online
recruitment numbers reflect a variety of job creation efforts — both by
the government and private sector — as well as labor turnover. Hiring
did take place during the recession, Harriott said, as part of normal
movement in the labor market.
“So there’s a lot of things going on in an online recruitment
number, you can’t really pull out what’s the impact of the stimulus
bill,” he commented.
It is widely believed the recovery in the U.S. could be a “jobless”
one, where economic conditions improve but without a matching jump in
employment. Altanta Fed’s Lockhart even went so far as to warn that,
“It’s also quite possible circumstances justifying the start of a cycle
of policy tightening will develop well before the unemployment rate has
found a satisfactory level.”
Given the number of jobs lost during the recession, “it will take a
long time to rebuild that,” Harriott said, but added it is typical for
the labor market to lag both an economic decline and recovery.
** Market News International Washington Bureau: 202-371-2121 **
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