US employment figures for November were disappointing, showing a rise of only 50,000 in private-sector payrolls. Private job openings (i.e. vacancies), however, increased sharply in October, reaching a 26-month high, suggesting that employment growth will pick up in early 2011 – see first chart. (Openings are released a month later than payrolls but lead turning points in the latter by about six months.)
Job openings are rising at a similar pace to 2005, when private payrolls increased by nearly 200,000 a month. Assuming no change in government jobs, such growth would result in a steady decline in unemployment – payrolls need to rise by about 110,000 a month to keep the jobless rate stable, based on the recent rate of expansion of the working-age population and a constant labour-force participation rate.
In further evidence of improving US economic momentum, the six-month rate of change of the OECD's US leading index stabilised in October while a "leading indicator of the leading index" strengthened for the third consecutive month – second chart. This improvement is occurring on schedule following an acceleration in US real narrow money since the summer, highlighted in numerous previous posts.
The view here remains that the Federal Reserve's QE2 liquidity boost was unnecessary and is likely to prove counterproductive.
