Today’s employment report contains a bit more of the good news workers comp have been hoping for: an increase in manufacturing employment and continued overall growth in industrial production. Overall, the economy generated 190 thousand jobs in March, the highest rate of job creation in three years.
according to Marketwatch,
“Manufacturing payrolls increased by 17,000. Construction employment rose by 15,000. Manufacturing hours increased by half an hour to 41 hours per week, with 3.7 hours of overtime on average.”
The net is positive – more jobs, longer hours, more overtime.
A decline in construction spending tempered the positive employment news, but that could have been significantly affected by the lousy weather experienced by much of the country in February.
The investment income picture isn’t quite as encouraging, with returns for the P&C industry down sharply in 2009 over the prior year, That’s somewhat offset by the jump in the equity markets over the last year. While higher returns would be nice, the silver lining is comp insurers aren’t able to keep premiums low by generating significant investment income, forcing underwriters to price to risk rather than bank on high investment returns covering claims costs.
There are some indications that carriers are beginning to strengthen pricing in selected markets and products. That’s not to say the market is turning, but the bottom may be near.
What does this mean for you?
As employment picks up in manufacturing and the spring brings increased construction activity, claims counts and frequency are also likely to rise. While bad news for the injured, this will be good news for occ medicine clinics, managed care and bill review firms, PBMs, and, most of all, TPAs.
Apr
2
Joe, in the 190,000 new jobs, I think you have to take out the hiring of the census workers that the govt is starting in the first quarter of this year. Although they are new jobs, they are temporary.
Tom – thanks for the comment. The census worker jobs are indeed temporary; a significant portion of jobs each month are also categorized as such. I’d also note the lower job counts for the previous moht were affected by weather and other factors that suppressed hiring.