Are Business Applications Early Economic Indicators?

Abstract

Are business applications early indicators of economic activity? Our analysis indicates that monthly year-over-year growth in applications for likely employer businesses significantly leads growth in total nonfarm employment and has a positive correlation with it. In addition, growth in applications for likely employers leads growth in almost all other monthly Principal Federal Economic Indicators considered. These findings are robust to the inclusion of the COVID-19 pandemic period. Business applications for likely employers appear to be a strong leading indicator of aggregate economic activity.