Total nonfarm employment represents the sum total of private and public sector employment less farm workers, private household employees, and non-profit employment. It is the primary indicator of employment, and all sector level employment is generally examined relative to this metric. Increases to nonfarm employment indicate that businesses are hiring which not only imply strong market fundamentals, but that those that are newly hired (positive changes to the number) will have additional income to spend and encourage a “virtuous economic cycle”.
Nonfarm Employment Data
Below nonfarm employment is plotted in blue1. Through much of the 1990s nonfarm employment grew at a relatively brisk rate of 0.17 percent month over month (2.04 percent annual rate). Since then it has grown at the relatively more moderate rate of 0.02 percent month over month (0.24 percent annual rate).
The sharp decline in 2005 is the effect of worker migration out of Louisiana as a result of hurricane Katrina. We do not return to that peak level of pre-hurricane employment until April 2013. The drop in labor market activity as a result of the great recession occurs in 2009, well after the start of the crisis. The labor market recovers from that decline by the end of 2012. The lagging behavior of the labor market in recessions is observed at the national level as well, though it is somewhat magnified at the state level.
Nonfarm Employment Forecasts
Forecasts2 for Louisiana nonfarm employment are made from an aggregation of multiple statistical models designed to approximate the underlying data generating process of the available data. A Bayesian model averaging approach is used here to capture the joint uncertainty that any given model may be misspecified as well as capturing the probabilistic uncertainty inherent in each individual estimate. Observed data is given in blue while forecasts are presented in orange. The weighted average of all models used is represented by the solid orange line. The upper bound and lower of the cone of uncertainty surrounding these estimates is represented by the dashed upper and lower lines respectively.
Please note that the graphs below are interactive HTML widgets. Please hover over each to examine the underlying data that comprises them.↩
Forecasts are provided as a convenience and for informational purposes only without any explicit or implied warranty. The authors and publishers of this post and site bear no responsibility for the information provided here and cannot be held liable for any negative consequences that may arise due its publication. Forecasting the future is inherently a tricky proposition, and all forecasts have an error term attached to them. Please exercise caution when making financial and business decisions based on the information provided. Use this information as a single input into your decisions making process.↩