Tag Archives: jobs

The Great Transformation: Robots Will Displace 20 Million Jobs By 2030

A new report by Oxford Economics says accelerating technological advances in automation, engineering, energy storage, artificial intelligence, and machine learning have the potential to reshape the world in the 2020s through 2030. The collision of these forces could trigger economic disruption far greater than what was seen in the early 20th century.

Across the world, a new wave of investment in automation could displace 20 million manufacturing jobs by 2030. This coming period of change should be called the great transformation period where job losses due to automation will be on par to the automation of agriculture revolution ( the transition of farm workers into the industrial sector) from 1900 to 1940.

Robots have so far increased three-fold since the Dot Com bust. Momentum in trends suggests the global stock of robots will multiply even quicker through the 2020s, reaching as many as 20 million by 2030, with 14 million in China alone. The collision of automation in the economy will lead to more volatility and economic swings.

The adoption of new automation technologies can significantly boost income inequality and, by extension, wealth inequality. Many countries, including the US, are entering the 2020’s with extreme inequalities, and automation will likely accelerate that trend. Oxford Economics estimates that 20 million manufacturing jobs across the world will be displaced by robots by 2030.

By 2030, most of the automation disruption in major manufacturing countries will be centered in China, the EU, and the US:

  • China: over 11 million
  • European Union: almost 2 million
  • United States: nearly 1.7 million
  • South Korea: nearly 800,000
  • The rest of the world: 3 million

Oxford Economics developed the Robot Vulnerability Index – where specific regions across the US are at the highest risk of labor disruption thanks to automation.

The crosscurrents of these macroeconomic force could dramatically reshape economies around the world. Nevertheless, displacing blue-collar manufacturing jobs with robots will continue to drive income/wealth inequality to such extreme levels that governments will be forced to become more interventionist, using higher taxes, regulation, and policy to control economic imbalances.

Source: ZeroHedge

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Politics Of The Employment Report

Today’s non-farm payrolls miss, 134k total jobs created in September, sealed the deal on the job creation political debate before the November midterms.   That is all things being equal — during President Trump’s first 20 employment reports versus President Obama’s last 20 — the Trump economy created 347k fewer total non-farm payroll jobs, and 137k fewer private sector jobs, than President Obama’s economy.

The differential will move even more against President Trump when October non-farm payrolls are reported, the Friday before the election, as the May 2015 326k jobs comp will be a bar too high to conquer.

These are the facts, spin them as you wish.

On the eve of the midterm elections it is likely that the Democrats will be able to argue that President Obama’s economy created 500k more jobs than President Trump’s economy over a similar period.   Reality clashes with virtual reality and bombastic rhetoric.

Perspective

However,  all things are never equal.  The Trump economy is running up against labor constraints with shortages breaking out almost everywhere, which is reflected in today’s 3.7 percent unemployment rate print, a 49-year low. It’s difficult to create the marginal job on this side of the inelastic labor supply curve.

Data should always be placed in the proper context.  But, hey, we are talking politics here,  and, politics ain’t beanbag,” folks.

Other Notables 

  • The shrinking labor supply is illustrated in the inflation differentials during the two periods –  4.14 percent under Trump, and 2.12 percent during Obama’s last 20 months in office.
  • Trump’s nominal Average Hourly Earnings are running about 70 bps higher than Obama
  • Real Average Hourly Earnings under Trump is about 1.3 percent lower than during President Obama’s last 20 employment reports
  • Real GDP growth under Trump is almost double President Obama’s last six quarters in office, but not reflected in the overall labor market, which reflects the economy continues to reward capital disproportionate to labor
  • Manufacturing jobs have recovered smartly during President Trump first 20 months, much of it due to the increase in oil prices, especially in the mining sector
  • Job creation in the government sector, which, on average, generates higher income paying jobs than the private sector, is much lower under President Trump

https://macromon.files.wordpress.com/2018/10/employment_2.png

https://macromon.files.wordpress.com/2018/10/employment_1.png

Source: Global Macro Monitor


Where The Jobs Were In June: Who’s Hiring And Who Isn’t

As noted earlier, September was a hurricane-affected month for payrolls, resulting in lower than expected jobs across several categories, among which Leisure and Hospitality jobs were the hardest hit.

https://www.zerohedge.com/sites/default/files/inline-images/leisure%20and%20hosp%20spet%202018.jpg

However, a deeper dive reveals that other industries were also severely impacted, with the 2nd worst September in contraction in Retail (-20K), Telecom (-3K), Education (-12K), Child Care (-4K) and Food Services (-23K).

This, according to Southbay Research, was remarkable because while last year’s layoffs surged 100K above trend due to 2 major Hurricanes that displaced millions and destroyed 10s of thousands of homes, with jobless claims across Texas, Florida and Puerto Rico soaring by 100K+, this year, one hurricane came but was very mild and had minimal impact, with Initial Jobless Claims rose a combined 12K. Yet somehow, “the impact was the same.”

Here’s one example: Food Services. As Southbay notes, somehow a mild storm led to layoffs at a scale only seen last year when 2 major Hurricanes shut down Puerto Rico and Florida and pummeled Texas.

https://www.zerohedge.com/sites/default/files/inline-images/food%20services.png?itok=Xlo30Uai

One note here is that if one were to revise last month’s data to incorporate the “missing” jobs, the impact on hourly earnings would be adverse as these are mostly lower paying jobs, and while the result would have been higher jobs, it would have also pushed down on hourly earnings.

Odd BLS estimates of layoffs aside, we know the following:

  • Employment in professional and business services increased by 54,000.
  • Health care employment rose by 26,000 as hospitals added 12,000 jobs, and employment in ambulatory health care services continued to trend up (+10,000).
  • Employment in transportation and warehousing rose by 24,000. Job gains occurred in warehousing and storage (+8,000) and in couriers and messengers (+5,000).
  • Construction employment continued to trend up in September (+23,000).
  • Employment in manufacturing continued to trend up in September (+18,000)
  • Employment in mining, employment in support activities for mining rose by 6,000

And visually:

https://www.zerohedge.com/sites/default/files/inline-images/jobs%20sept%20breakdown.jpg?itok=3pYNtUkj

Looking over the past year, the following charts from Bloomberg show the industries with the highest and lowest rates of employment growth for the prior year. The latest month’s figures are highlighted.

https://www.zerohedge.com/sites/default/files/inline-images/jobs%20bbg%202018-10-05_10-08-41.jpg?itok=YKWJ8IjG

One final observation from Southbay Research, who notes that overtime pay dropped as staffing increases.

Overtime is a temporary solution to strong demand.  While a drop in overtime can signal a fall in demand, it can signal that employers no longer think the strong demand is temporary.

Whatever the reason, after 1+ years of above-trend overtime, employers have turned to hiring.  Because it’s also cheaper than paying double rates for overtime. This, to Soutbay, “is another metric supporting continued hiring growth.”

https://www.zerohedge.com/sites/default/files/inline-images/overtime_0.png?itok=2rWocdZO

Source: ZeroHedge

The College Collapse

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“..What this tells us is the elite are beginning to set fire to the bridges over the river that separates them from us. The positions in the Cloud will require passing through one of the monasteries to be properly vetted. In the future, the Dirt People will have to sort out their status system within their favelas…”

Back when National Review first allowed comments on their posts, they would post all sorts of things in their group blog. Readers would respond to all of it. For example, when they were looking for a receptionist, they posted the job on the blog. Hilariously, one of the requirements was a four-year degree. Why anyone with a college degree would take a receptionist job was a mystery, but an even bigger mystery was why National Review would require it. The comments on it were the best things posted that week.

Of course, Rich Lowry was not really thinking about the requirements of the job when he posted it. What he wanted was someone from his world, the world where everyone goes off to college and sends their kids off to college. In other words, he was signalling to potential applicants that he did not want Rosie from the neighborhood, who likes to file her nails while on the phone. Instead, he wanted a young white girl fresh out of college, who just needed a job while she sorted out what she was going to do with her life.

That is, in many ways, what a college degree has become since the 60’s. It tells potential employers things about yourself that they could never ask and that would never show up on the CV. For example, if you went to a private college, it means you most likely were raised in an upper middle-class family. If you went to the satellite campus of the state university, it probably means you came from the lower ranks and you were not a great student. These are the sort of subtle clues that are reflected in the education section.

Of course, attending an elite university is the big flashing neon sign on a person’s resume, which is why entrance is super-competitive. It’s also why it is not difficult to graduate from one of these colleges. The graduation rates at these colleges are near 100%, even for athletes. Compare that to Ranger School, where 60% fail the first time. Yet, if you have the former on your CV, it counts for more than if you have the latter. The people hiring for elite positions care much more about what the former says about the applicant.

This is why a few years ago the elites started to panic over the influx of foreign students into elite colleges. The competition for these slots was already tough. Having to compete with the children of foreign ruling classes would make the process even more difficult for the children of Cloud People. Of course, this is why Harvard, and most likely the other elite colleges, discriminate against Asians. The elite is for whites and Jews, with a sprinkling of diversity to spice it up to allow the elite to pretend they like diversity.

This “problem” with the elite colleges has been an excuse for the ConservoCons to shriek “hypocrite” at their Progressive masters, but it is actually a good thing that the people in charge are fine with racial discrimination. At the minimum, it suggests they still have the will to survive. It also reminds us that they are not bound by their own rules when defending their privileges. No ruling class in human history has peacefully agreed to step aside based on the logic of their own rules. They always have to be removed by force.

At the other end of the spectrum, colleges that serve the hoi polloi have been struggling with a different set of problems. A diploma from State U is about practical things like getting a job and bargaining for a salary. In fact, it really only matters for the first decade after graduation. After that, the work history is what counts. The great bust-out that is the American public college system has reached a terminus and enrollments are now starting to drop, as people figure out the return is not always worth the investment.

As a result, the public universities in America are slowly beginning to change. One remedy has been to import foreign students, who will pay full rate. This actually started with small private colleges like Boston University in the 1980’s. They figured out that Japanese kids would come to Boston, pay tuition in cash, as long as they were not required to study too hard. For state colleges, there is the added benefit of being able to charge full rate, rather than the discounted rate for in-state students. That and it counts for diversity points.

Of course, like every business fighting a revenue drop, cost cutting is on the table. In America, much of college is just an extension of high school. Look at the requirements of college fifty years ago and compare them to now. Then there are the frivolous things like gender studies or communication arts. Pretty much everything in the core curriculum of a modern college should be tackled in high school. The rest should be discarded. That’s why we see colleges dropping large chunks of their current offerings.

There is something else going on that speaks to the larger issues looming over the North American Economic Zone. Members of the High Moral Council are starting to drop the college requirement for new hires. What this tells us is the elite are beginning to set fire to the bridges over the river that separates them from us. The positions in the Cloud will require passing through one of the monasteries to be properly vetted. In the future, the Dirt People will have to sort out their status system within their favelas.

It also opens the door to further polluting the standards that reflect biological reality. By dropping the college requirement, the companies are free to hire the black over the white, the female over the male. After all, without anything close to an objective standard, the latest moral fads handed down from on high are the default filter. It also makes the diversity tax explicit. Companies will be expected to hit their vibrancy quotas, because they will not have the excuse that they cannot find qualified non-white candidates.

Source: The ZMan

Canadian Economy Lost 51,600 Jobs In August – Largest Drop In Decade

Canada’s economy unexpectedly lost 51,600 jobs, with wage gains slowing and Ontario recording its biggest employment drop in nearly a decade, removing any urgency for the central bank to accelerate rate hikes.

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The nation’s largest province lost 80,100 jobs in August, all part-time, the biggest decline for Ontario since 2009. Nationally, the economy lost 92,000 part-time workers, though a 40,400 gain in full-time employment is one sign the labour market is firmer than the headline number suggests.

“The wacky world of Canadian jobs data stayed that way in August, but there was at least one positive amidst a generally downbeat report that came on the heels of an upbeat July. That positive was in a solid 40,000 rise in full time work, but that was swamped by a nose-dive in part time jobs,” Avery Shenfeld, managing director and chief economist with CIBC Capital Markets, wrote in a note to clients. 

The data released Friday by Statistics Canada in Ottawa reversed strong employment gains made earlier this summer, including sharp increases in Ontario. But the overall picture is one of a labour market gearing down markedly from last year and an economy not at risk of overheating. That reinforces expectations the Bank of Canada will take a cautious approach to increasing borrowing costs.

The jobs numbers are “consistent with a gradual rate hike path and really not a whole lot of urgency,” said Robert Kavcic, a senior economist at BMO Capital Markets.

The Canadian dollar slipped after the jobs report, down as much as 0.3 per cent to $1.3182 per U.S. dollar. The currency rose as much as 0.4 per cent Thursday after Bank of Canada Senior Deputy Governor Carolyn Wilkins said the central bank’s top officials debated this week whether to accelerate the pace of potential interest rate hikes, before finally choosing to stick to their current “gradual” path.

The Bank of Canada has raised interest rates four times since mid-2017 to keep inflation from moving permanently beyond its 2 per cent target, and indicated it will need to make additional hikes to keep price gains from accelerating because the economy is roughly at capacity.

So far in 2018, the economy has shed 14,600 jobs, but the number masks a 97,300 gain in full-time jobs. Part-time employment is down by 111,900 this year.

The net loss in August — which was the second largest monthly decline since the last recession — drove the unemployment rate to 6 per cent, from 5.8 per cent a month earlier, while wage gains decelerated to their slowest this year. However, the jobless rate still remains near four-decade lows.

Economists had expected a gain of 5,000 jobs and an unemployment rate of 5.9 per cent, according to the median estimate in a Bloomberg survey.

https://www.bnnbloomberg.ca/polopoly_fs/1.1134645!/fileimage/httpImage/image.png_gen/derivatives/default/canada-wage-gains-slow.png

Other Highlights

-Wage gains for all workers slowed in August, with average hourly pay up 2.9 per cent from a year ago. That’s the slowest pace since December.

-Wage gains for permanent employees were down to 2.6 per cent, the slowest since October

-Actual hours worked were up 1.6 per cent from a year ago, after an increase of 1.3 per cent in July, reflecting the increase in full-time workers

-By industry, the decline was broad-based and included a loss of 16,400 jobs in construction and 22,100 in the professional services sector.

Source: by Theophilos Argitis | Bloomberg News

Americans Show “Enormous Increase In Support” Of Universal Basic Income

As automation and AI destroy millions of middle-income jobs, permanently forcing (primarily male) workers from the workforce, Americans are beginning to reconsider their attitudes toward a radical policy tool that’s popular among some segments of the left: Universal Basic Income.

According to CNBC, a recent poll conducted by Northeastern University and Gallup found that 48% of Americans support the measure. In an association that’s hardly a coincidence, the poll also showed that three-quarters of Americans believe machines will take away more jobs than they’ll generate…

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Unsurprisingly 65% of Democrats want to see a universal basic income and 54% of people between the ages of 18 and 35 do. In comparison, just 28% of Republicans support UBI.

While proposals for universal basic income programs vary, the most common one is a system in which the federal government sends out regular checks to everyone, regardless of their earnings or employment. That system is being tested in Canada and Finland, as well as Stockton, California, which recently emerged from bankruptcy but remains mired in poverty.

Support for UBI and wariness about automation/AI have become closely linked in the public consciousness. The movement has even inspired America’s first “anti-automation” presidential candidate: New York businessman Andrew Yang is launching a “longer-than-long-shot bid” for the 2020 Democratic nomination, on a platform of adopting a “freedom dividend” (a fancy term for UBI), to help offset the impact of automation.

Advocates say all of the UBI-focused experiments being conducted are an opportunity to show that the policy could boost both productivity, as well as individual happiness and overall wellbeing.

“The claim is often made that if you give people a basic income, they’ll become lazy and stop doing work,” said Guy Standing, co-founder of the Basic Income Earth Network. “It’s an insult to the human condition. Basic incomes tend to increase people’s work rather than reduce it.”

Political philosopher and economist Karl Widerquist remembers a poll from 10 years ago that showed just 12 percent of Americans approved of a universal basic income.

“It’s an enormous increase in support,” Widerquist said.

“We don’t need to threaten people with homelessness and poverty to get them to work,” he added.

“It’s capitalism where income doesn’t start at zero.”

Of course, the odds of UBI actually being enacted in the US are highly unlikely.

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Robert Greenstein, president of the Center on Budget and Policy Priorities, estimates that a program providing everyone with $10,000 annually could cost more than $3 trillion a year, a bill that is more likely to increase poverty than reduce it.

“This single-year figure equals more than three-fourths of the entire yearly federal budget – and double the entire budget outside Social Security, Medicare, defense, and interest payments,” Greenstein wrote in a CBPP commentary last year.

Still, a recent McKinsey study found that automation could eliminate up to 800 million jobs by 2030…

…If such a dire outlook comes to pass, the US – and practically every government – will need to devise a plan for mitigating the devastating impact this will have on employment.

https://www.zerohedge.com/sites/default/files/inline-images/2018.02.26mckinsey.JPG?itok=yuwWk0at

So – in ten years, eight of which were ruled over by President Obama – the proportion of Americans who want more free shit for doing nothing has quadrupled (from 12% to 48%)… now that is ‘conditioning’!!

Source: ZeroHedge

Small Town Suburbia Faces Dire Financial Crisis As Companies, Millennials Flee To Big Cities

College graduates and other young Americans are increasingly clustering in urban centers like New York City, Chicago and Boston. And now, American companies are starting to follow them. Companies looking to appeal to, and be near, young professionals versed in the world of e-commerce, software analytics, digital engineering, marketing and finance are flocking to cities. But in many cases, they’re leaving their former suburban homes to face significant financial difficulties, according to the Washington Post.

Earlier this summer, health-insurer Aetna said it would move its executives, plus most of technology-focused employees to New York City from Hartford, Conn., the city where the company was founded, and where it prospered for more than 150 years. GE said last year it would leave its Fairfield, Conn., campus for a new global headquarters in Boston. Marriott International is moving from an emptying Maryland office park into the center of Bethesda.

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Meanwhile, Caterpillar is moving many of its executives and non-manufacturing employees to Deerfield, Ill. from Peoria, Ill., the manufacturing hub that CAT has long called home. And McDonald’s is leaving its longtime home in Oak Brook, Ill. for a new corporate campus in Chicago.

Visitors to the McDonald’s wooded corporate campus enter on a driveway named for the late chief executive Ray Kroc, then turn onto Ronald Lane before reaching Hamburger University, where more than 80,000 people have been trained as fast-food managers.

Surrounded by quiet neighborhoods and easy highway connections, this 86-acre suburban compound adorned with walking paths and duck ponds was for four decades considered the ideal place to attract top executives as the company rose to global dominance.

Now its leafy environs are considered a liability. Locked in a battle with companies of all stripes to woo top tech workers and young professionals, McDonald’s executives announced last year that they were putting the property up for sale and moving to the West Loop of Chicago where “L” trains arrive every few minutes and construction cranes dot the skyline.”

The migration to urban centers, according to WaPo, threatens the prosperity outlying suburbs have long enjoyed, bringing a dose of pain felt by rural communities and exacerbating stark gaps in earnings and wealth that Donald Trump capitalized on in winning the presidency.

Many of these itinerant companies aren’t really moving – or at least not entirely. Some, like Caterpillar, are only moving executives, along with workers involved in technology and marketing work, while other employees remain behind.

Machinery giant Caterpillar said this year that it was moving its headquarters from Peoria to Deerfield, which is closer to Chicago. It said it would keep about 12,000 manufacturing, engineering and research jobs in its original home town. But top-paying office jobs — the type that Caterpillar’s higher-ups enjoy — are being lost, and the company is canceling plans for a 3,200-person headquarters aimed at revitalizing Peoria’s downtown.”

Big corporate moves can be seriously disruptive for a cohort of smaller enterprises that feed on their proximity to big companies, from restaurants and janitorial operations to other subcontractors who located nearby. Plus, the cancellation of the new headquarters was a serious blow. Not to mention the rollback in public investment.

“It was really hard. I mean, you know that $800 million headquarters translated into hundreds and hundreds of good construction jobs over a number of years,” Peoria Mayor Jim Ardis (R) said.

For the village of Oak Brook, being the home of McDonald’s has always been a point of pride. Over the year’s the town’s brand has become closely intertwined with the company’s. But as McDonald’s came under pressure to update its offerings for the Internet age, it opened an office in San Francisco and a year later moved additional digital operations to downtown Chicago, strategically near tech incubators as well as digital outposts of companies that included Yelp and eBay. That precipitated the much larger move it is now planning to make.

“The village of Oak Brook and McDonald’s sort of grew up together. So, when the news came, it was a jolt from the blue — we were really not expecting it,” said Gopal G. Lalmalani, a cardiologist who also serves as the village president.

Lalmalani is no stranger to the desire of young professionals to live in cities: His adult daughters, a lawyer and an actress, live in Chicago. When McDonald’s arrived in Oak Brook, in 1971, many Americans were migrating in the opposite direction, away from the city. In the years since, the tiny village’s identity became closely linked with the fast-food chain as McDonald’s forged a brand that spread across postwar suburbia one Happy Meal at a time.

“It was fun to be traveling and tell someone you’re from Oak Brook and have them say, ‘Well, I never heard of that,’ and then tell them, ‘Yes, you have. Look at the back of the ketchup package from McDonald’s,’ ” said former village president Karen Bushy. Her son held his wedding reception at the hotel on campus, sometimes called McLodge.

The village showed its gratitude — there is no property tax — and McDonald’s reciprocated with donations such as $100,000 annually for the Fourth of July fireworks display and with an outsize status for a town of fewer than 8,000 people.”

Robert Gibbs, the former White House press secretary who is now a McDonald’s executive vice president, said the company had decided that it needed to be closer not just to workers who build e-commerce tools but also to the customers who use them.

 “The decision is really grounded in getting closer to our customers,” Gibbs said.

Some in Oak Brook have begun to invent conspiracy theories about why McDonald’s is moving, including one theory that the company is trying to shake off its lifetime employees in Oak Brook in favor of hiring cheaper and younger urban workers.

The site of the new headquarters, being built in place of the studio where Oprah Winfrey’s show was filmed, is in Fulton Market, a bustling neighborhood filled with new apartments and some of the city’s most highly rated new restaurants.

Bushy and others in Oak Brook wondered aloud if part of the reasoning for the relocation was to effectively get rid of the employees who have built lives around commuting to Oak Brook and may not follow the company downtown. Gibbs said that was not the intention.

‘Our assumption is not that some amount [of our staff] will not come. Some may not. In some ways that’s probably some personal decision. I think we’ve got a workforce that’s actually quite excited with the move,’ he said.”

Despite Chicago’s rapidly rising murder rate and one would think its reputation as an indebted, crime-ridden metropolis would repel companies looking for a new location for their headquarters. But crime and violence rarely penetrate Chicago’s tony neighborhoods like the Loop, where most corporate office space is located.

“Chicago’s arrival as a magnet for corporations belies statistics that would normally give corporate movers pause. High homicide rates and concerns about the police department have eroded Emanuel’s popularity locally, but those issues seem confined to other parts of the city as young professionals crowd into the Loop, Chicago’s lively central business district.

Chicago has been ranked the No. 1 city in the United States for corporate investment for the past four years by Site Selection Magazine, a real estate trade publication.

Emanuel said crime is not something executives scouting new offices routinely express concerns about. Rather, he touts data points such as 140,000 — the number of new graduates local colleges produce every year.

“Corporations tell me the number one concern that t: Zerohey have — workforce,” he said.”

Chicago Mayor Rahm Emanuel said the old model, where executives chose locations near where they wanted to live has been upturned by the growing influence of technology in nearly every industry. Years ago, IT operations were an afterthought. Now, people with such expertise are driving top-level corporate decisions, and many of them prefer to live in cities.

“It used to be the IT division was in a back office somewhere,” Emanuel said. “The IT division and software, computer and data mining, et cetera, is now next to the CEO. Otherwise, that company is gone.”

Source: ZeroHedge

LinkedIn Job Postings Plunge, “by far the Worst Month since January 2009”

Is the job market for professionals unraveling?

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The jobs data in the US has recently taken a nasty spill. Last week it was an ugly jobs report from the Bureau of Labor Statistics. It could bounce off next month, and the current data could be revised higher, but we’re not seeing the signs of this sort of hiring momentum.

Instead, we’re confronted with a sharp and ongoing deterioration of a leading indicator of the labor market: temporary jobs. They rise and fall months ahead of the overall number of jobs. The sector peaked in December 2015 at 2.94 million. It shed 21,000 jobs in May, and 63,800 since December. This is also what happened in 2007 and 2000, at the eve of recessions.

This week, it was the Fed’s very own Labor Market Conditions Index which dropped to the worst level since the Financial Crisis, a level to which it typically drops shortly before the onset of a recession – and shortly before employment gives way altogether. It still could bounce off as it had done in early 2003, but it better do so in a hurry

So now comes LinkedIn, or rather MKM Partners, an equity and economics research firm, with a report in Barron’s about LinkedIn – “While we like LinkedIn’s long-term prospects and believe that sentiment on the company’s opportunity is overly negative, we remain at Neutral on the stock,” it says. Rather than disputing the deterioration in the labor market or throwing some uplifting tidbits into the mix, the report highlights yet another 2009-type super-ugly data point.

LinkedIn has some, let’s say, issues. Its stock has gotten hammered, including a dizzying plunge in February. It’s now down over 50% from its high in February 2015. The company lost money in 2014, 2015, and in the first quarter 2016 despite soaring revenues. And that revenue growth may now be at risk.

But we aren’t concerned about the stock or the company. We’re concerned about that 2009-type super-ugly employment data point.

MKM Partners discussed that data point because it’s worried that investors might misconstrue it as weakness at LinkedIn, rather than what’s happening in the labor market and the overall economy:

We believe that LinkedIn is a unique network, the de facto in Recruiting with promising opportunities in Sales and Learning. We are concerned that the jobs tailwind over the past six-years is becoming a headwind and that any further softness in Hiring revenue would incorrectly be perceived as a TAM (total addressable market) issue vs. a macro issue.

The online jobs data is getting “incrementally worse,” the report explained (emphasis added):

After 73 consecutive months of year-over-year growth, online jobs postings have been in decline since February. May was by far the worst month since January 2009, down 285k from April and down 552k from a year ago.

Online job postings are not a direct revenue driver for LinkedIn. We do however believe it is a reflection of overall hiring activity and should be considered a check on demand vibrancy.

And the report frets that “further deterioration” could trigger a “revenue shortfall” in the second half.

LinkedIn caters to professionals, people with well-paid jobs, or people looking for well-paid jobs. They’re software developers, program managers, petroleum engineers, executives of all kinds, marketing professionals, sales gurus…. They span the entire gamut. And companies use LinkedIn to recruit those folks.

So with online job postings on LinkedIn plunging since February, and with May clocking in as “by far the worst month since January 2009,” then by the looks of it, businesses are slashing their recruiting efforts in those professional categories.

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If that bears out, it would be another sign that not only the labor market but the overall US economy have taken a major hit recently, that businesses have started to respond to sales which have been falling since mid-2014 and to profits which have been falling since early 2015, and to productivity which declined in Q1 and has been weak for years – and that they’ve begun to look at their workforce for savings. And if this bears out, they will confront the possibility of a looming recession with even steeper cuts.

by Wolf Richter | Wolf Street