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The growth rate of private sector jobs is decent

According to the household survey, private sector jobs have risen at an annualized pace of 1.4% over the past six months. That number will very likely approach 2.5% next month, assuming only modest gains in employment in June, because the bottom in employment was last December. A 2.5% rate of growth in private sector jobs would be entirely consistent with a modest decline in the unemployment rate; the labor force tends to grow about 1% over time, but it has not grown much at all in the past few years, so we ought to expect labor force growth to be closer to 2% for the next 6-12 months; thus 2.5% jobs growth will only result in a minimal reduction in unemployment. In any event, while this does not look at all like a robust recovery, it is nevertheless a recovery, and I see no sign that it is about to end. The market needs to look beyond the establishment survey—things are nowhere near as bad as the headlines suggest.

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