The Employment Situation

06.05.2009

The trough in employment losses is now evident with national data released Friday morning.  Economists had expected non-farm payroll losses of 520,000, but actual losses came in at 345,000.   This difference is quite significant, and provides further evidence of the economy hitting a trough in overall non-farm employment changes.  

The nation’s unemployment rate increased to 9.4% however.   New claims for unemployment continue to decline, and continuing claims may have also peaked.   Moderating job losses and a climbing unemployment rate suggest difficulty in finding work once unemployed.   As new claims continue to fall, we should begin to see the unemployment rate decline as well.

Last week, the Bureau of Economic Analysis released data on corporate profits, and indicated that corporate profits increased during the first quarter.  Why is this significant?  Increasing corporate profits is a key signal to any recession end.  When the business cycle dating people get together, it would not surprise me if they conclude that the official recession end will be around mid-year. 

There was mixed news on the employment situation for Louisville Metro this week.  The region’s unemployment rate declined to 9.3% in April compared to the 10.2% for March.  Some of this is due to seasonality, but the significance of the decline was impressive.  Non-farm payroll losses in Louisville also appear to be leveling off.  April losses for Louisville metro did accelerate from March, but now appear to also be stabilizing.  April losses stand at 20,600 compared to 18,200 for March.     Going forward, year over year non-farm payroll losses will likely not exceed the 20,600 number.

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This information is provided by

Uric Dufrene. 

Uric Dufrene, Ph.D. holds the Sanders Chair in Business in the School of Business at Indiana University Southeast.  He conducts research on local and regional economic trends, and teaches corporate finance at the undergraduate and graduate levels.   He previously served as dean of the School of Business.