Posted by Joseph Y. Calhoun, III

Robert Johnson at Morningstar provides this article about employment statistics and their usefulness in pinpointing the end of the recession:

Our conclusion is that at the bottom of an economic cycle, the initial jobless claim peak tended to lead the economy by a month or two. The employment trough, however, lagged the economic bottom by almost five months, and the unemployment rate pulled up the rear, lagging the economy by almost eight months.

As I’ve pointed out before on this blog, the ISM is a better indicator:

There are a number of indicators that are more helpful than the employment measures. One of our favorites has been the New Orders Index from the Institute of Supply Management (ISM). As shown in the table above, this metric has led the trough in the economy by about three months and has always been a leading indicator in each recession. This metric bottomed in December 2008 at 23.1, improved in January, was flat in February, and was over 41 for the March reading. Some other indicators are also showing improvement, but this is one of the more dramatic ones and is one of the reasons we believe the economy could easily hit its bottom by June.