The ADP report gives us a first glimpse at what employment did in the month of June. The official payroll series comes, as always, on Friday.

The best we can say is that the series is moving in the right direction. There are fewer job losses this month than the last. That is an ambiguously good sign. The problem is that the rate of improvement is slowing. Yes, that’s right I am bringing up the third derivative, changes in the rate of change of the change in total employment. These things matter, however, because the derivatives not only help us forecast future values but display patterns themselves.

Even in the last jobless recovery we can see that the change in employment rockets up close to zero before slowing down. That is, the economy moves quickly towards neither creating nor destroying jobs. This time the economy is giving hints that it wants to stay out around minus 400K a month. As if the steady-state where a recession.

With the specter of the Japanese Lost Decade still looming, such signs are less than encouraging. Still two months don’t make a trend and a month’s worth of third derivative analysis makes even less than that. Stay tuned.

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