Some Good News in Some Very Bad Weather
(My apologies for the late post – I posted this 3 hours ago but it didn’t publish so I am trying again)
PolEcon’s NH Leading Index jumped from a revised + 3.7 to +13.0 this month. its highest value since January of 2011. An Index reading of + 13.0 isn’t a signal of robust growth but it is a substantial improvement over much of the past 18 months and if it continues for another month or two it will be a clear sign of a much improved NH economy.
Weather and electricity permitting, the October edition of the Trend Lines will be emailed or available to read online at http://www.issuu.com/polecon. Seven of the nine indicators in the Index improved over the month, with initial claims for unemployment insurance showing an especially large drop. I prefer initial claims data to the unemployment rate, as it gives greater insight into the near-term direction of the labor market. I’ve stated in a prior post that I believe job growth in NH will be revised upward, based on aggregate wage and salary growth and the volume of help-wanted advertising in the state. Declining initial unemployment claims are another indicator that actual job growth is likely somewhat higher than is currently being reported (NH has seen a few negative year-over-year monthly job growth reports recently). At an average weekly number of claims at 1,400 for the month, it is still much higher than the under 1,000 number that is typically seen during periods of solid job growth, but the number continues its downward trend. The chart below shows how new claims currently compare with claims during previous periods of growth and recession. On a three-month moving average basis, the number of new claims in NH is now about what is was during the short-lived recession of the early 2000s, and compared to the first “great recession” of the early 1990s, it is also about as high now as during that difficult time. But there is also a larger population in the state and also more employment so examining initial claims as a percentage of employment in the state provides a better comparison to where the labor market stands today and where it may be heading. That comparison makes the current labor market appear to be in the early stages of recovery from recession rather than two years removed from the official end of one, but its a sign of recovery nevertheless.