|Bureau of Labor Statistics|
It is still improving
In May, the unemployment rate was stable at 7.6%, as the economy added 175,000 new positions compared to 149,000 in April. The participation rate increased a tiny fraction from 63.3 to 63.4%. Hourly earnings rose at +2% year-over-year for the second straight month, better than the pace of rate growth shown at the beginning of 2013. Discourage workers are mildly getting back on track. In addition, the number of people leaving their jobs is rising as household confidence is improving. The construction sector keeps adding new positions and the unemployment rate is now at 10.8% compared to last year’s 14.2%. Nonetheless, the main gains have come from the service sector.
Will it last?
Since 1948, the unemployment rate has had two bullish cycles (1952-61, 1969-1982). These movements lasted for nine and for thirteen years and extended 63 and 67% top to bottom. Furthermore, they each climbed in three distinct waves before collapsing. Declines prior to the final upswing lasted for four (1975-1979) and for two (1958-1960) years before prices rose for the final peak. Declines stretched 38 and 33% respectively. The last wave up continued for one (1960-1961) and for three years (1979-1982) from the bottom. Within these secular bull cycles, the unemployment rate topped/bottomed every four to six years, whereas bearish corrections continued for one to three years top to bottom. How would these fit in today’s scenario? Unemployment began in 2000; it topped in 2003, bottomed in 2007, and completed the second wave in 2009.
Angelo Airaghi, www.ProfitsOn.com
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