The view expressed in prior posts that the global economic recovery will be sustained through 2010 rests on improvements in corporate liquidity feeding through to a pick-up in business investment and hiring, with rising employment supporting consumer incomes and spending. Recent US and UK evidence is consistent with firming labour demand.

In the US, non-farm payrolls fell by 171,000 in the three months to February but last month's number was depressed by snow storms that prevented some existing employees and new hires from turning up for work. An alternative payrolls measure based on households' assessment of their employment status is likely to have been less distorted by weather effects and rose by 292,000 over the last three months – see first chart. A catch-up gain in headline payrolls is possible this month.

Leading indicators have improved further: a measure based on the ISM manufacturing employment index, the NFIB small firm hiring plans index and the Challenger-Gray-Christmas lay-offs tally has risen to a level historically consistent with three-month payrolls growth of between 250,000 and 500,000 – second chart.

In the UK, job vacancies rose by a surprisingly-strong 11% in the three months to January from the prior three months, a pick-up confirmed by the Market jobs survey – third chart. Vacancies correlate with GDP so this suggests that underlying economic momentum, abstracting from weather effects, strengthened around year-end – final chart.