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economy lab

The monthly U.S. payroll numbers that attract so much attention are net figures: a tally of all the hiring and firing taking place each month.

The U.S. Labour Department's monthly report Job Openings and Labour Turnover Survey generally attracts little notice. But anyone serious about studying the recovery should be paying closer attention. Federal Reserve chairman Ben Bernanke is.

Mr. Bernanke raised the profile of the JOLTS report considerably last month when he used the data to help explain why he's skeptical the unemployment rate will continue to fall at a rapid pace.

The survey measures employment, job openings, hires, quits, layoffs and other types of separations. The Labour Department is scheduled to release February data Tuesday morning at 10 a.m.

The lateness of the JOLTS figures explains the report's lower profile. The Labour Department's March estimate of non-farm payroll employment and the unemployment rate were released last week, as anyone who watches equity markets well knows.

Yet the delay allows for a clearer reading of labour market conditions. The monthly payroll numbers that attract so much attention are net figures: a tally of all the hiring and firing taking place each month.

As Mr. Bernanke pointed out to an audience in Washington last month, one side of that equation has improved dramatically. Layoffs have slowed considerably, allowing the unemployment rate to drop. However, for that momentum to continue, employers must boost their hiring. And that's not happening.

There were 4.3 million job openings when the U.S. economy dropped into recession in December, 2007. That number bottomed at 2.2 million in July, 2009, and climbed back to 3.2 million in April, 2010. Job openings then slid a bit before getting back to three million in October, 2010. The figure climbed to 3.5 million in September of last year, and hasn't moved much since.

That suggests employers are holding back from taking on new workers. The hiring rate was 3.3 per cent in March, 2011, and has oscillated between 3.1 per cent and 3.2 per cent ever since. In 2006, the hiring rate was never lower than 3.8 per cent.

"The declines in aggregate payrolls during the recession stemmed from both a reduction in hiring and a large increase in layoffs," Mr. Bernanke said in a speech in late March. "In contrast, the increase in employment since the end of 2009 has been due to a significant decline in layoffs but only a moderate improvement in hiring. To achieve a more rapid recovery in he job market, hiring rates will need to return to more normal levels."

Mr. Bernanke didn't define a "normal" hiring rate. As the Labour Department's chart of hiring rates over the past 10 years, the normal rate is probably considerably higher than then current 3.1 per cent. Between January, 2002, and the start of the recession in December, 2007, the hiring rate was never lower than 3.6 per cent.