Here are a few of the graphs I tend to check on with the monthly employment report.
Durations look good. Very long term unemployment continues to slowly decline. And, while insured unemployment has leveled out (at very low levels), there still appears to be a slight downward trend in shorter duration unemployment. In durations, we see that last month looked like there was an aberration in very short durations that pushed the unemployment rate down. Even with that aberration correcting back up this month, there was a decent decline in the unemployment rate this month that was hidden by rounding.
In flows, everything still generally looks good, like a well-running expansion. The one point of concern is the sharp drop in flows from Not-in-Labor-Force to Employed. This is why there was a drop in labor force participation. This sort of sharp drop isn't unheard of, and could correct next month. But, it is definitely something to keep our eyes on. Especially with the Federal Reserve persistently erring on the hawkish side, if we proceed with a rate hike and subsequent months confirm this drop in flows into employment, this would be an important early indicator that a shift from expansion to contraction was taking place.
It would be completely unnecessary, and I hope we can avoid it. It looks to me like we are entering a late expansion phase, similar to the late 1990s, and with inflation as low as it is, there really isn't a reason for us to be afraid of monetarily supporting as long of an expansion as we can muster.
Both the net NtoE and net UtoE flows are now on the margin of being uncomfortable. If the weighted average NtoE (green line above) flow remains under -0.1% and the UtoE flow falls below 0.15%, these would be flow behaviors associated with a coming contraction, especially if they coincide with contractionary Fed policy and a flattening yield curve.