EMPLOYMENT REPORT

The employment report was bad, as private payroll employment only rose 83,000. Moreover, the household survey showed a drop in employment of -350,000.


The unemployment rate fell. But that is because the – 350,000 fall in household survey was offset by a -652,000 drop in the labor force. A labor force contraction is really bad news as it implies public confidence in the availability of jobs deteriorated.


Moreover, the average workweek on private nonfarm payrolls fell 0.1 to 34.1 hours.
As a consequence of modest employment gains and a drop in the workweek the index of aggregate hours worked only rose 0.1%. However, the three month growth rate of hours worked did expand t0 3.3% (SAAR), almost exactly the same as last month.

In addition, average hourly earnings also fell and the year over year growth in average hourly earnings fell to 1.7% . The drop in workweek also caused the gain in average weekly earnings to tick down as well. Average hourly earnings growth is now where it bottomed in the 1986 and 2004 wage cycles– the lowest gains in this series since it was first recorded in 1967.

Regardless of how it is calculated, the current gap between employment and the long term trend of employment is at post WW II record levels.

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