Forex Flash: Lower layoffs driving job gains, not hiring - Nomura

Nomura economists Ellen Zentner and Roiana Reid feel that following Friday´s surprising NFP results, lower layoffs are driving job gains, not hiring.

They begin by noting that US payrolls grew by a net new 236k jobs in February, while the 12-month moving average of job growth stood at 167k. However, net job growth has remained resilient despite the subpar economic recovery. They see that data on worker flows in and out of the labor market imply that net job growth is being driven more by a declining rate of layoffs, as opposed to acceleration in hiring. Further, the rate of hires and layoffs closely tracked each other in the first half of 2012, but hiring appears to have slowed late in the year, while layoffs have continued to drop. Layoffs as a share of total employment have returned to pre-recession levels, which means that to maintain the current level of net job growth, hiring will need to accelerate.

They continue to add that FOMC Vice Chairman, Janet Yellen, recently indicated she is following metrics of job flows such as the job quits rate (number of quits as a share of total employment) - a measure of employee confidence in the labor market because it represents workers who feel comfortable enough in job prospects to leave a current position voluntarily. They feel that the job quits rate has slowly been trending upward, though appears to have stalled more recently. The job openings rate, a measure of employer confidence, has also maintained an upward trend. they finish by writing, “The improvement in these measures is encouraging, if painfully slow.”