Following the Right Employment Statistic

At the Institute we encourage our clients to dismiss the common notion that the unemployment rate is a good indicator to watch pertaining to future economic conditions.  While the economy and employment are absolutely related, the unemployment rate is usually one of the last numbers to improve in an economic recovery. This is because businesses need to utilize their current capacity before they can start hiring again. 

A better employment number to watch is Average Weekly Hours of Production Workers.  This statistic is released at the same time as the unemployment numbers each month but is usually significantly less publicized. In fact, Hours Worked data has led US Industrial Production through 8 of the last 8 business cycle lows while employment led only 1 out of 8.  Average Hours Worked in the past three months is 1.4% above the year-ago level and rising; a promising sign for economic recovery in 2010.