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The Employment Report and Business Cycle Indicators

Summary:
April employment figures were released today, showing a marked slowdown in the labor market. Here’s a depiction of these figures in the context of key macro indicators followed by the NBER Business Cycle Dating Committee: Figure 1: Nonfarm payroll employment from April release (dark blue), Bloomberg consensus as of 4/30 for April nonfarm payroll employment (light blue +), industrial production (red), personal income excluding transfers in Ch.2012$ (green), manufacturing and trade sales in Ch.2012$ (black), consumption in Ch.2012$ (light blue), and monthly GDP in Ch.2012$ (pink), all log normalized to 2020M02=0. Source: BLS, Federal Reserve, BEA, via FRED, IHS Markit (nee Macroeconomic Advisers) (5/3/2021 release), NBER, and author’s calculations. It’s interesting to note the shortfall

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April employment figures were released today, showing a marked slowdown in the labor market. Here’s a depiction of these figures in the context of key macro indicators followed by the NBER Business Cycle Dating Committee:

The Employment Report and Business Cycle Indicators

Figure 1: Nonfarm payroll employment from April release (dark blue), Bloomberg consensus as of 4/30 for April nonfarm payroll employment (light blue +), industrial production (red), personal income excluding transfers in Ch.2012$ (green), manufacturing and trade sales in Ch.2012$ (black), consumption in Ch.2012$ (light blue), and monthly GDP in Ch.2012$ (pink), all log normalized to 2020M02=0. Source: BLS, Federal Reserve, BEA, via FRED, IHS Markit (nee Macroeconomic Advisers) (5/3/2021 release), NBER, and author’s calculations.

It’s interesting to note the shortfall in terms of the consensus, as well as the ADP release, for private nonfarm payroll employment.

Figure 2: Private nonfarm payroll employment from BLS April release (black), Bloomberg consensus for April as of 5/5 (teal square), ADP April release (red), all on log scale. Source: BLS, ADP via FRED, Bloomberg, and author’s calculations.

Discussion of the reasons for the relatively slow growth (supply, demand, statistical anomaly), by Irwin/NYT; Furman and Powell/PIIE.

Menzie Chinn
He is Professor of Public Affairs and Economics at the University of Wisconsin, Madison

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