Two Hours of Pushin' Broom

JACKSON HOLE, Wyo. --

Manpower

(MAN) - Get Report

is a Milwaukee-based staffing-services firm that surveys the hiring intentions of more than 16,000 public and private employers every three months. Yesterday it released the results of its third-quarter 1999 survey.

The Manpower column in the table above shows the year-on-year change in something called Net Hiring Strength. Net Hiring Strength is the percentage of firms reporting they will add to their permanent workforces next quarter less the percentage of firms reporting they will subtract from same. The first payrolls column in the table shows the year-on-year change in nonfarm jobs, and the second shows the average quarterly increase in nonfarm jobs.

Two notes.

The Manpower measure of employment, which does a decent job of tracking the year-on-year change in payrolls (note that both peaked during late 1997-early 1998 and then continued down through the second quarter of this year), just turned a corner. The point here is not that this measure is still falling, or that it is (obviously) too early to call the turnaround permanent. The point here, rather, is that Greenspan and Meyer have both stated clearly that the labor market will have to quit tightening in order to keep them from raising the federal funds rate.

Yet the Manpower numbers suggest that the labor market will continue to tighten (at least through September). Year-on-year payroll growth looks to come in no worse than 2.1% during the third quarter (and the betting individual might even put money on a modest acceleration). That seems very unlikely to produce an increase in jobs of less than 200,000 (note that the low first-quarter average owes to a freakish 7,000-job gain in March), and that stands to drive the unemployment rate even lower. Why? Because even employment increases as "little" as 160,000 jobs are enough to keep downward pressure on the jobless rate. Note that the unemployment rate fell to 4.3% during the first quarter of 1999 from the fourth quarter of 1998, for example; it also fell to 5.6% in 1995 from 6.1% in 1994 even though average job growth almost halved between those years (it fell to 185K from 320K).

Why is this important?

Because it will increase the pressure on the

Fed

to raise rates. Along with a looser labor market and improvement (outright deceleration) in the

core (excluding food and energy) price measures

, the Fed wants to see the economy slow to below trend. Yet there will be no material and permanent economic slowdown in the absence of a material and permanent consumption slowdown, and there will be no material and permanent consumption slowdown in the absence of a material and permanent employment slowdown.

And as has been the case for three years now, there is no good reason to be forecasting one of those.

Side Dish

So the goal was to go down to

Atlanta

and be really disappointed so that it would be really easy (and horror-show fun) to come back and write a column trashing the place.

Turns out that I just can't do it.

I ended up having way too good a time.

And about the poll today: Please feel free to write in and say that this column is the only real crap on the site.

Is it just me? Or is there lately a lot more crap on the site?

There is clearly more crap.

There is actually less crap.

There is the same amount of crap as always.