This time last month, data was out which seemed to prove the US was in recession. Since then, most economists have accepted this, although the Fed chairman Ben Bernanke is not yet admitting to it.
And the data that was so damning: Non-farm employment levels had fallen for two months in a row.
Now, four weeks on and the latest set of data is out, and this time it is even worse.
In fact, March was the worst month for a long time – with non-farm payrolls falling by 80,000. Over the last quarter, the fall is now 232,000.
Capital Economics uttered alarming words indeed when it said, “Private payrolls have fallen by an average of slightly less than 100,000 over the last three months. Declines of that magnitude have never been seen outside of a recession (or in the immediate aftermath of a recession). More worryingly, private payrolls have never fallen at that pace without going on to record average monthly declines of at least 200,000 shortly afterwards. In short, conditions are already bad in the labour market but, if history proves to be a reliable guide, they are going to get even worse over the next few months.”
The unemployment rate also rose, hitting 5.1 per cent, from 4.4 per cent last March. Until recently, both unemployment and employment had been rising – but these two somewhat contradictory movements ceased in January of this year, and since then both measures have been getting worse.
For much of last year it was the strength of the labour market that had many claiming the US would avoid recession.
Actually, right now, things are not that disastrous. Sure, employment has fallen by 232,00 in three months, but then again it had risen by around 241,00 during the previous three-month period.
The point is though, the data looks set to get worse.
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