Saturday, July 7, 2012

IsJob Growth Higher than the Gov is Reporting?

New report suggests hiring increased last month: Oregon economic news

Published: Thursday, July 05, 2012, 8:07 AM     Updated: Thursday, July 05, 2012, 9:10 AM
A private report released this morning suggests employers ramped up hiring in June, adding 176,000 jobs. Last month’s job growth could provide critical evidence whether the economy’s sluggish recovery has slowed to a halt or lost further ground.

Payroll firm ADP’s monthly employment report offers an early glimpse, because it is often released just days ahead of the federal government’s official jobs data.

But the two reports varied widely last month, leaving unanswered questions ahead of the official report tomorrow. ADP said private employers in May added 133,000 jobs, while the government said employers added just more than half that number, at 69,000 jobs.

That gap may widen. ADP upwardly revised its May data, saying private nonfarm payrolls added 136,000 jobs that month.

The economy showed signs of marked recovery in the first three months of the year, but hiring has significantly slowed since, according to the Bureau of Labor Statistics. It will release the June jobs data, as well as May revisions, tomorrow morning.

Income stalemate

Portland-metro area incomes flatlined in 2010, recovering little of the steep losses from the previous year.

Personal incomes in Washington and Multnomah counties stood at 1999 levels, and Clackamas County incomes at 2001 levels. Both figures are adjusted for inflation.

The recent Bureau of Economic Analysis data shows per-capita personal incomes in Washington and Multnomah counties increased 0.7 percent to $40,222 in 2010, doing little to erase a 5.5 percent drop the previous year.

Clackamas County incomes dropped even more sharply in 2009, losing 6.1 percent. Personal incomes gained 0.3 percent in 2010, climbing to $44,954.

Recent economic reports point to a recovering housing sector and a slowing manufacturing industry.Housing gains, manufacturing slumps

Oregon’s Office of Economic Analysis argues it’s a natural transition as part of the economic recovery: 

There is this handoff that occurs from the manufacturing cycle, which has so far helped to drive the initial phase of the recovery, to housing, which will propel the economy in the near future.

They go on:

In the recovery so far, beyond personal consumer expenditures, exports and investment – largely the manufacturing cycle – have been significant contributors, while the housing downturn continued to languish. Now, housing growth has returned but the industry is not yet doing the heavy lifting. The much stronger growth in housing is not expected until 2013 and 2014 in our forecast, and most others as well.

But University of Oregon economist Tim Duy writes in his popular blog, Fed Watch, that he’s hesitant to embrace the tradeoff theory, given residential construction’s impact on the economy’s growth. He argues instead that a housing price bubble may continue to hamper growth.

I tend to believe the price-driven balance sheet effects were driving dynamics over this past business cycle. Absent a healing of household balance sheets (or, relatedly, monetary policy that supported such healing via somewhat higher inflation expectations to reduce debt in real terms), I would expect overall growth to remain subdued, despite a rebound in residential construction.

--“Molly Young, @mollykyoung

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