Are The Recent Employment Estimates a Precursor of Market Decline?

Are The Recent Employment Estimates a Precursor of Market Decline?

Colin Nelson, research analyst of business market segmentation for Reed Business, using the Bureau of Labor Statistics' recently released February employment numbers and In-Stat/MDR estimates, says that the sharpest drop in employment since November 2001 gives every indication of being a short-term, cyclical anomaly, and the monthly employment numbers should correct for it at some point later this year.

In fact, recognizing that new orders and shipments of manufactured goods increased by over 2% in January, construction spending was up for the fifth straight month, and employment continues higher than the 1990-1994 period, In-Stat/MDR estimates that US employment will increase by roughly 1.2% annually over the course of 2003. And, the article notes that, barring significant unforeseen events, the economy is expected to head towards recovery by the end of 2003, albeit slowly.

Nelson writes that there are several reasons to believe that the employment numbers look worse than they actually are. Thousands of military reservists have been called to active duty, leaving their civilian jobs. He notes that they may account for perhaps a third of February's job losses. Secondly, snowstorms on the East Coast over the reference period may have delayed work in certain weather-sensitive industries, such as construction, which suffered an estimated 48K job losses over the month. In addition, new benchmarking techniques used by the Bureau, using Census 2000 statistics in their estimates, may have an impact on the next estimates.

Last year's version of In-Stat/MDR's upcoming report, "State of US Business: A Demographic and Vertical Industry Profile of the US Business Market" is available here.

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