How many more economic reports will we see that start with “despite Hurricanes Katrina and Rita...”? Yet more strong employment data were released last Friday. The unemployment rate dropped to 5.0%. Unreported by the media was the fact that the household survey went up by +214,000 jobs. That is good news, of course, so it was rarely cited in the news. There was some hand-wringing about people leaving the workforce, but all indications from the small print of the Bureau of Labor Statistics report are that the bulk of those leaving were by choice, such as returning to school or staying home with family. So overall, the report was a lot better than the “little changed” comment that opened the BLS press release where it cited that payroll employment was up +56,000.

The net new business calculation dropped back a little, but is still above 72,000+ net new businesses per month, and is back at the level it was at in July. That's 860,000+ net new businesses a year.

I must remind you that employment is a lagging indicator of the economy, and that even during a slowdown, employment measures often improve for about six months. During a recovery, employment begins improving six months or so after other indicators rise (as employers wring out what they can from overtime and open capacity before they start hiring again). There is a good chance that the new business measure above may warn about an economic slowdown sooner, but I am basing this metric on a relatively new data series from the Bureau of Labor Statistics, so there is no history about how it has behaved as either a lagging, coincident, or leading marker of slowdowns.