In a poll from last December, my colleague Chris Barker asked Fools what it would take to make them "feel comfortable declaring that sustainable recovery has begun." Thirty-eight percent chose "when the unemployment rate improves for six consecutive months."
The unemployment rate is still awful, but we've now seen net job gains for four months in a row. (The unemployment rate can rise even while jobs are created as those who had given up re-enter the workforce.) That's nothing to sneeze at after two years of utter job annihilation.
The economy added 290,000 jobs in April, which was the highest monthly addition since early 2006. Even stripping out the 66,000 temporary jobs added by the U.S. Census Bureau, this was by any measure an extraordinary jobs report.
There are a few other less obvious signs that the job market is awakening. Here are three.
"Separations" is a term economists use to describe workers who quit, are laid off, or retire. It's those who were employed last month but aren't anymore for whatever reason (deaths are the only exception). In March, there were 4 million separations nationwide, yet 4.2 million people were hired. Moreover, 1.9 million workers quit in March while 1.8 million were laid off. Quits also exceeded layoffs in February; that was the first time voluntary quits exceeded layoffs in well over a year, showing the re-emergence of flexibility and mobility in the workforce.
2. Hours worked
When you're a business in trouble, the first thing you do is lay off workers you can no longer justify keeping. That's what happened in 2009. The second thing you do is work your remaining employees like rented mules, squeezing as many hours out as possible. That's what's happening right now. Average weekly hours worked in April came in at 34.1, up from 33.9 a year ago and 33.0 last September. Average overtime hours in the manufacturing sector rose from 2.1 per week a year ago to 3.0 today. Eventually, employers won't be able to extract any more labor out of existing workers and will be forced to hire more staff.
3. An exodus of mass layoffs
A "mass layoff" occurs when one employer axes 50 or more workers in a single swoop. These are important to track because they show severe companywide trauma, rather than a more targeted weeding out of redundant jobs. In the first quarter, there were 1,564 mass layoffs nationwide. That was far less than half the amount of a year before, the lowest level since early 2008, and in fact lower than levels seen in late 2006, when the economy was still charging. Of employers initiating mass layoffs, 42% "expected to recall at least some laid-off workers," according to the Bureau of Labor Statistics.
We can also note some meaningful anecdotes. Cisco
It's still atrociously bad out there, mind you. But recoveries aren't born overnight. To get to the final outcome, you move in stages from really bad, to less bad, to faint tinges of optimism. That's where we are now.
Fool contributor Morgan Housel owns shares of Berkshire Hathaway. Berkshire Hathaway is a Motley Fool Inside Value recommendation and a Stock Advisor selection. The Fool owns shares of and has written puts on Oracle. The Fool owns shares of Berkshire Hathaway, and has a disclosure policy.