Lagging indicators show moderating decline-- That's good news

May 4, 2009

It is important to understand the difference between lagging and leading economic indicators, since the reports in the media tend to muddle the two sets of indicators together. Unemployment and hiring are lagging indicators. That means that an economic downturn has started months before unemployment starts growing, and an upturn starts months before unemployment stops growing.

It is important to understand the difference between lagging and leading economic indicators, since the reports in the media tend to muddle the two sets of indicators together. Unemployment and hiring are lagging indicators. That means that an economic downturn has started months before unemployment starts growing, and an upturn starts months before unemployment stops growing.

So take a look at this information released today from The Conference Board:

Online advertised vacancies dropped 131,000 to 3,117,000 in April, according to
The Conference Board Help-Wanted Online Data Series (HWOL)™ released today.

The April loss follows drops of 6,600 in February and 100,000 in March but much larger drops of 500,000 in both December and January. In total, advertised vacancies are down 1,321,000, or 30 percent, in the last six months.

“Based on the April numbers, we are not out of the woods, but the decline in labor demand is moderating,” said
Gad Levanon, Senior Economist at The Conference Board. “April and May are both months where business
typically steps up their demand for workers. This year, that bounce may be more evident next month. With the
April drop, the gap between labor demand (HWOL) and supply (unemployment) will widen further when the
federal unemployment numbers are released this Friday. In March, there were 10 million more unemployed
workers than advertised vacancies.”

If unemployment and hiring are, in fact, lagging indicators, it would seem that a recovery of sorts is in the works, and has been for some time.

Now's the time to start putting together a strategy, whether you're a vendor, an end-user company, or a simple employee for what you're going to do when the turnaround gets going full blast. If you're an automation professional, and you're unhappy where you are, now is the time to start putting out feelers and calling and emailing friends in your network-- you'll have your pick of jobs as hiring re-starts.

If you're a vendor or system integrator or rep or distributor, now's the time, as Bill Pollock said on Saturday, to make sure you have the right staff and the right amount of cash to roar out of the gate as the economy starts to pick up.

And we'll see more, rather than less, unemployment for a while. That's the problem with watching lagging indicators.