June jobs report: great headline, but once again where are the wages?!?

June jobs report: great headline, but once again where are the wages?!?

HEADLINES:

  • +222,000 jobs added
  • U3 unemployment rate rose +0.1% from 4.3% to 4.4%
  • U6 underemployment rate rose +0.2% from 8.4% to 8.6%

Here are the headlines on wages and the chronic heightened underemployment:

Wages and participation rates

  • Not in Labor Force, but Want a Job Now: down -130,000 from 5.561 million to 5.431 million
  • Part time for economic reasons: up +107,000 from 5.219 million to 5.326 million
  • Employment/population ratio ages 25-54: up +0.1% from 78.4% to 78.5%
  • Average Weekly Earnings for Production and Nonsupervisory Personnel: up $.04 from $21.99,  to $22.03, up +2.3% YoY.  (Note: you may be reading different information about wages elsewhere. They are citing average wages for all private workers. I use wages for nonsupervisory personnel, to come closer to the situation for ordinary workers.)

Holding Trump accountable on manufacturing and mining jobs
Trump specifically campaigned on bringing back manufacturing and mining jobs.  Is he keeping this promise?

  • Manufacturing jobs rose by +1,000 for an average of +2000 vs. the last severn years of Obama’s presidency in which an average of 10,300 manufacturing jobs were added each month.
  • Coal mining jobs were unchanged for an average of +200 vs. the last severn years of Obama’s presidency in which an average of -300 jobs were lost each month

April was revised upward by +33,000. May was also revised upward by +14,000, for a net change of +47,000.

The more leading numbers in the report tell us about where the economy is likely to be a few months from now. These were mainly positive.

  • the average manufacturing workweek rose +9.1 hour from 40.7 hours to 40.8 hours.  This is one of the 10 components of the LEI.
  • construction jobs increased by +16,000. YoY construction jobs are up +206,000.
  • temporary jobs increased by +13,400.
  • the number of people unemployed for 5 weeks or less increased by +151,000 from 2,154,000 to 2,305,000.  The post-recession low was set 18 months ago at 2,095,000.

Other important coincident indicators help  us paint a more complete picture of the present:

  • Overtime was unchanged at 3.3 hours.
  • Professional and business employment (generally higher- paying jobs) increased by +35,000 and is up +624,000 YoY.
  • the index of aggregate hours worked in the economy rose by 0.5 from 106.9 to 107.4
  • the index of aggregate payrolls rose by +0.8 from 134.0 to 134.8.

Other news included:

  • the alternate jobs number contained  in the more volatile household survey increased by   +190,000   jobs.  This represents an increase of 1,560,000  jobs YoY vs. 2,238,000 in the establishment survey.
  • Government jobs rose by +35,000 .
  • the overall employment to population ratio for all ages 16 and up rose +0.1% from  60.0% to  60.1 m/m  and is  up +0.5%  YoY.
  • The  labor force participation rate rose +0.1%  m/m and is up +0.1% YoY from 62.7% to 62.8%.

SUMMARY 

The best thing about this report was the headline number of jobs added, plus the big positive revisions to April and May, which brought the average of the last three months to +191,000.  Most of the leading internals were also positive, suggesting the positive headline news should continue over the next six months. Those not in the labor force but who want a job now also declined to a post-recession low (but still elevated by nearly 1 million above the late 1990s boom.)

While the unemployment and underemployment rates went up, this was balanced by the increase in labor force participation rate.

One weak spot was that involuntary part-time employment increased slightly.  Also, politically, Trump  has so far actually *underperformed* Obama in the net for manufacturing and coal mining jobs.

But the one big negative — broken record here — was wages, which have now grown only +2.3% YoY for nonsupervisory workers.  So while this a a very good late cycle report, my fears are increasing about how bad it will be for workers when the next recession does hit.

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