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Daily Economic Briefing: March 9, 2010

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Page 1 of 2: Global data summary

• The latest global Manpower Employment survey found that global labor market conditions did not change much between its latest and previous quarterly surveys. Taking the net balance index at face value, planned net hiring is sluggish but positive in the US and about zero in the Euro area and Japan, but quite robust in many emerging economies. This comports with what we are seeing in official data. Although we do follow the Manpower survey, we find that our global PMI employment index does a much better job of tracking official employment. The PMI employment index is more timely and its statistical relationship is considerably greater. Its message is that employment has started growing again, including in the US.
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• The January US JOLTS (job openings and labor turnover) hinted that the rate of job openings is beginning to climb, although this will need to be confirmed in subsequent surveys. Based on the limited history of this series (data starts in December 2000), the level of job openings is correlated with (and possibly leads) employment, so we will want to keep a watch on this series For example, during the “jobless” phase of the 2000s recovery, the job openings rate did not turn up until late 2003, coincident with the resumption of job growth.
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• China will be reporting its key macro indicators for February (or combined January/February, in many cases) this week. The first installment was auto sales, which came in at 13.5mn units (saar), down from the all-time high of 14.6mn in January. China’s car sales have grown so explosively fast, roughly doubling from the 2007 average sales pace, that it is difficult to know what to expect next. As with many other macro indicators, Chinese auto sales do appear to be influenced by the timing of the Lunar New Year holidays, which landed in February this month (car sales tend to dip during the holiday month).
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• With all the major markets now having reported, global car sales dipped 1.1mn units to 53.0mn (saar) in February. January’s 54.1mn total was the all-time high. The Jan/Feb average is running slightly above the 4Q09 average, so car sales look to be a slight positive for growth in consumer spending this quarter. We will thoroughly review the February results in tomorrow’s DEB.
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The Global Manpower Employment Outlook survey suggests that recent improvement in global labor markets stalled this quarter. The global aggregate that we create from national survey data slipped 1 point to a reading of 4, a level that is above the 2009 lows but still well shy of the index level prior to the Great Recession. The Manpower surveys, conducted in January, ask employers about their net hiring plans in the next quarter relative to the present. Despite this forward-looking question construction, we find that the survey is actually most correlated with employment growth at the time the surveys are taken. As such, the latest readings labeled “2Q” are more of a reflection of the employment situation at the start of the year.

Based on our statistical analysis, the current global level is consistent with payroll losses at about a 1-1.5% annualized pace. This is a considerably less favorable message than our global all-industry PMI employment index or our global employment proxy constructed from national employment releases. As such, we would not read too much into the exact level of the Manpower data. However, the latest stall does highlight the slow labor market improvement that we have seen in the current recovery.

Looking at the regional breakdown, the US diffusion index ebbed 1pt to 5 after jumping 8 pts in the previous release. Surveys for Western Europe and Japan have yet to show much improvement at all in the recovery. In Europe—thanks to especially weak readings in Italy and Spain— the index is just 2pt above its trough. In Japan, the Manpower index is just 1pt above its recession low. Some of the smaller DM economies have shown more substantial gains, notably Australia and New Zealand.

Manpower surveys from the EM have bounced back sharply. On average, index levels are back to their 2007 averages in EM Asia. Mexico and Peru are the only other EM countries for which we have seasonally adjusted data; in both cases, Manpower indexes have steadily risen over the past year.

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ENDS

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