Friday, February 05, 2010

Employment Diffusion Index

by Bill McBride on 2/05/2010 01:37:00 PM

Usually I include a graph of the employment diffusion index in one of my employment posts - a measure of how widespread job losses (or gains) are - but the BLS moved everything around today, so it took me some time to find the data.

Employment Diffusion IndexClick on graph for larger image in new window.

The BLS diffusion index for total private employment increased to 46.8 from 41.3 in December. This is the same level as in November.

Think of this as a measure of how widespread job losses are across industries. The further from 50 (above or below), the more widespread the job losses or gains reported by the BLS. From the BLS:

Figures are the percent of industries with employment increasing plus one-half of the industries with unchanged employment, where 50 percent indicates an equal balance between industries with increasing and decreasing employment.
The diffusion index had been trending up, meaning job losses are becoming less widespread.

However a reading of 46.8 still shows a minority of industries are adding workers, and I'd expect the diffusion index to be at or above 50 when the employment recovery begins.

Earlier employment posts today:
  • Employment Report: 20K Jobs Lost, 9.7% Unemployment Rate for graphs of unemployment rate and a comparison to previous recessions.
  • Employment-Population Ratio, Part Time Workers, Temporary Workers
  • Unemployed over 26 Weeks and Seasonal Adjustment