The consensus around May 2nd’s better-than-expected jobs report was that it demonstrated the resilience of the labour market, and that this strength may presage the beginning of a recovery. Wishful thinking, says Barry Ritholtz, who is mostly–but not completely–right.
Riffing on a Merrill Lynch report, Ritholtz suggests that companies actually slashed the equivalent of 400,000 jobs–but they just did it by cutting hours worked:
“Companies did not cut as many positions as expected, they cut the hours instead. The average work week plunged 0.3% (and, aggregate hours worked were down at an annual rate of 1% in the past three months), which, by the way, would be the equivalent of 400,000 job cuts.”
In case you missed the underlined text, employers cut back so many hours that it was the functional “equivalent of 400,000 job cuts.” This is not the sort of data you associate with economic recoveries.
This is a fair point directionally, but we don’t think the analysis is as simple as “one job” equals “eight hours worked.” We suspect that the fact that firms are cutting hours instead of positions signals that they’re more optimistic about the future than if they were firing people–because they would rather keep the people so that they can ramp up when the economy improves.
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