Winning streaks are important. In baseball, hitters get hot. In basketball, a three-point shooter who can’t miss has hot hands. Sports fans are always rooting for a string of wins. So are investors and the Federal Reserve when it comes to jobs.
But that trend has cooled off slightly.
While the individual monthly employment data that gets much of the headline attention, the march of the statistics is more revealing as to the underlying economic strengths or weaknesses. “Obviously, we have to look at the pace of job creation,” said Federal Reserve Chairman Janet Yellen a week ago. She was responding to a question about how to judge when the central bank has fulfilled its mandate of maximum employment.
One way to see the pace of job creation is by looking at a three month running average of new jobs. A year ago, the economy was chugging along creating an average of more than 250,000 new jobs per month. This year, that has slowed to barely 200,000 new jobs per month.
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The de-acceleration comes as the Federal Reserve is openly debating when to raise interest rates for the first time in almost seven years. Employment is arguably the most important factor in its decision-making.
Similar to early 2014, the American economy shrank in the first three months of this year. While job growth slowed, it barreled through. A year ago, companies picked up hiring in the spring and summer. With the release of the June employment report on Thursday, investors will see if the job market can hit another hot streak this summer.
Financial journalist Tom Hudson hosts The Sunshine Economy on WLRN-FM in Miami. Follow him on Twitter @HudsonsView.