Employment Situation….Spencer England
This was another disappointing employment report It is looking more and more like the stronger numbers last winter stemmed more from the mild weather rather than a strengthening of underlying trends.
The headline or payroll report showed a gain of 115,000 jobs– 130,000 in private jobs and a 15,000 drop in government employment.
The work week was unchanged so the index of aggregate hours worked only rose 0.1%. The previous report was revised higher so that hours worked versus trend looks a little better than it did last month.
My thesis from last month that the slowing of employment growth was partially a product of firms trying to rebuild productivity growth still looks valid. In the productivity report, the growth in unit labor costs slowed from 3.1% to 2.1% while the increase in the nonfarm business deflator slowed from 2.1%
to 1.8% So the spread between unit labor cost is now only 0.3 percentage points versus 1.1 percentage points a quarter ago. Given that labor compensation is 58.7% of costs this should be consistent with single digit profits growth.
Spencer,
Excellent post. And don’t forget Labor force participation witch masks the unemployment numbers (From Instapundit):
People Not In Labor Force Soar By 522,000, Labor Force Participation Rate Lowest Since 1981. “It is just getting sad now. In April the number of people not in the labor force rose by a whopping 522,000 from 87,897,000 to 88,419,000. This is the highest on record. The flip side, and the reason why the unemployment dropped to 8.1% is that the labor force participation rate just dipped to a new 30 year low of 64.3%.”
This has got to have an effect on employment and economic growth as more people drop out of the work force. Drives soem of those charts you put up.
Islam will change
There is certainly some payback from the winter hiring surge in the slower pace of hiring in March and April. If that’s the whole explanation, then the slowdown is not all that scary. The average pace of hiring over the past 6 months is close to 200k – not enough, but not a train wreck. If the underlying pace of hiring remains 200k, after weather effects, why is wage growth slowing again? The low on a y/y basis was November of 2010, at 1.7%, and with wages a lagging indicator, that made pretty good sense. But now, we are back down to 1.8%, and it’s a bit late to blame the current state of affairs on the lagged impact of a recession that “ended” in 2009.
So I’m worried about our little labor market.
U-3 is a nonsense number..
rjs,
I agree with you. But you can expect Obama to be shouting it to the rafters, especially if it can be manipulated to under 8% by November…
Islam will change
spencer, I’ve said it before and I’ll say it again. Thank you for these reports!!!
Sorry, LPR is masking nothing. The BLS’s birth death model is underestimating employment, which means yearly revisions will probably add 100,000’s of jobs. Sorry, but we had this during the last 2 expansions as well. The end of 93/1994 showed this after the massive upward revisions.
My guess is private employment hires was about 180-200k. Yeah, maybe not the speed you ideally want on the back of the recession trough, but gains are being made.
Meanwhile, partly in reaction to the weak employment report spot oil prices just fell below $100.
This could be the most optimistic development we could see as it will dampen inflation and improve real income growth across the board. It could be the best stimulus the economy could get.
The former ‘good’ employment news was awful and only enough to slow the bleeding and the current ‘bad’ employment news by that measure OK. The ‘good’ news has been terrible as there are still 6 million less full time jobs than in Jan 08 and let us not forget one million net new jobs are needed every year to account for population growth. (that might be skewed down by the dearth of immagration, legal and otherwise.
The point is it is now the job of the elites to give the Fed a reason for more gigantic Open Market operations. The markets need them and so it will be. Then we can go back, if we are lucky, to more terrible jobs news which is sold as ‘good’.
Here are two more graphs that reallys point out just how far we’ve (not) come in the last 3 years…
The only reason we don’t have 11.3% (Zerohedge) unemployment is becuase everyone is dropping out of the labor force. Then add this abysmal report….
Now add the news that French will go hard left and pull Europe down with it. We live in interesting times.
Islam will change
Buffy is, of course, making stuff up. Hollande is not “hard left” and even if he were, there’s little room for him to make a big move to the left. Europe is already headed down, and there is a reasonable argument (made by Krugman, Wolf, Galbraith, Hamilton and others) that the austerity imposed by Sarkozy and his like are the reason Europe’s economy is sliding toward anothe recession. The news that France has elected Hollande may just be news that Europe has stopped shooting itself in the foot.
Kharris,
As usual your now becomming my personel stalker. Ilsm was acting in that role for awhile but it looks like you’ve taken up the mantle.
As for Hollande, he has already said he will fleece the rich to solve Europe’s problems and people are already starting to move assets and people out of France. Socialism only last as long as there is plenty of other people’s money. Hollande’s election will only hasten the demise of the statist policies that have driven Europe over the cliff. Hopefully we will see the breakup of the EU shortly and the demise of the Euro. That at least would let teh PIIGS solve thei problems.
I do note you failed to mention the primary part of my comment – the abysmal record Obama has mounted over the past 3 years. So bad he can’t even run on it! But Forward off the cliff!
Islam will change