August jobs report: for once, the underwhelming headline masked very good internals
August jobs report: for once, the underwhelming headline masked very good internals
HEADLINES:
- +130,000 jobs added (+105,000 ex-Census)
- U3 unemployment rate unchanged at 3.7%
- U6 underemployment rate rose 0.2% to 7.2%
Leading employment indicators of a slowdown or recession
I am highlighting these because many leading indicators overall strongly suggest that an employment slowdown is coming. The following more leading numbers in the report tell us about where the economy is likely to be a few months from now. These were positive.
- the average manufacturing workweek rose +0.2 from 40.4 hours to 40.6 hours. This is one of the 10 components of the LEI and is positive (note last month was -0.3 so on net this is still -0.1 hours from two months ago).
- Manufacturing jobs rose by 3,000. YoY manufacturing is up 138,000, a deceleration from last summer’s pace.
- construction jobs rose by 14,000. YoY construction jobs are up 177,000, also a deceleration from last summer. Residential construction jobs, which are even more leading, rose by 7,000.
- temporary jobs rose by 15,400 (note this *may* reflect census hiring).
- the number of people unemployed for 5 weeks or less rose by 6,000 from 2,201,000 to 2,207,000. The post-recession low was four months ago.
Wages and participation rates
Here are the headlines on wages and the broader measures of underemployment:
- Not in Labor Force, but Want a Job Now: rose by 107,000 from 5.043 million to 5.150 million
- Part time for economic reasons: rose by 397,000 from 3.984 million to 4.381 million
- Employment/population ratio ages 25-54: rose +0.5% from 79.5% to 80.0%. THIS IS A NEW EXPANSION HIGH.
- Average Hourly Earnings for Production and Nonsupervisory Personnel: rose $.11 from $23.48 to $23.59, up +3.5% YoY. This is still a slight decline from the recent YoY% change peak. (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 an average of +11,500/month in the past year vs. the last seven years of Obama’s presidency in which an average of +10,300 manufacturing jobs were added each month.
- Coal mining jobs rose +1200, an average of +117 jobs/month in the past year vs. the last seven years of Obama’s presidency in which an average of -300 jobs were lost each month
June was revised downward by -15,000. July was also revised downward by -5,000, for a net change of -20,000.
Other important coincident indicators help us paint a more complete picture of the present:
- Overtime fell -0.1 hours to 3.2 hours.
- Professional and business employment (generally higher-paying jobs) rose by +37,000 and is up +449,000 YoY.
- the index of aggregate hours worked for non-managerial workers rose by +0.3%
- the index of aggregate payrolls for non-managerial workers rose by +0.8%
- the alternate jobs number contained in the more volatile household survey rose by 590,000 jobs. This represents an increase of 2,274,000 jobs YoY vs. 2,074,000 in the establishment survey.
- Government jobs rose by 28,000 (up +3,000 ex-census).
- the overall employment to population ratio for all ages 16 and up rose 0.9% to 60.9% m/m and is up 0.6% YoY.
- The labor force participation rate rose 0.2% to 63.2% m/m and is up 0.5% YoY.
SUMMARY
This report was the mirror image of most others we have seen this year: the establishment report was mediocre, while the household report was excellent.
The deceleration in jobs growth was well in evidence in the headline number. The last three months, ex-census hiring, has only been +147,000. But construction and manufacturing jobs both did increase. Non-supervisory wage gains increased to +3.5% YoY. On the other hand, if census hiring was included in the temporary jobs number, that decreased significantly. It is also concerning that the revisions to prior months continue to be downward. This is something that tends to happen near turning points.
The household survey, on the other hand, was generally very strong. Almost 600,000 new jobs were added in that report, and the YoY gains now exceed the establishment report. The prime age employment to population ratio increased to its highest level since January 2008. It is only because of this big addition to the labor force that the unemployment rate stayed steady (vs. going lower) and the underemployment rate increased. Aggregate hours and payrolls both jumped.
So, despite the underwhelming headline number, this was overall a very good report.
Census added about a million jobs yry to household and it’s distorting employment. This disinvestment from census is a problem in 2020
EPR was more like 60.1-2 range
Nonsup wages were 3.3% ex-census
I am not trying to pick on you NewDeal, but this job market is growing employment at a population growth range. When census comes off, it will make a job market which imo will be in recession, look like great recession bad numbers, which will be absolutely incorrect as well.
“The household survey, on the other hand, was generally very strong. Almost 600,000 new jobs were added in that report, and the YoY gains now exceed the establishment report. The prime age employment to population ratio increased to its highest level since January 2008.”
590K to be precise. The overall employment to population ratio rose from 60.7% to 60.9% while labor force participation rose from 63% to 63.2%.
Expect Kudlow to say the household survey is NOW more reliable than the payroll survey. He is always the cheerleader for the GOP after all.
Bert as usual is full of BS. Hey Bert – Census employment will occur in 2020 but this was about August 2019. FRED has a nice historical chart called All Employees: Government: Federal
https://fred.stlouisfed.org/series/CES9091000001
You can see the surges for 1980, 1990, 2000, and 2010. They were not there in 1979, 1989, 1999, or 2009. They are not there for 2019 either. Bert – you might say you are a year ahead of yourself. The rest of us fully realize you are truly insane!
“EPR was more like 60.1-2 range”.
No Bert – it rose from 60.7% to 60.9% on an overall basis. Learn to READ the BLS report before popping off.
BTW – here is what NDD wrote: “The prime age employment to population ratio increased to its highest level since January 2008.”
Prime age is not the same thing as the overall EPR. Hey Bert – learn to read period.
ditto on prime age
Population growth is about 2M. At 60% EPOP that is 100K employment per month, so we are still growing employment at above population. Is it possible to have a soft landing? Can employment growth drop all the way to 100K per month without entering a recession? (NBER actually has multiple factors in its determination, so make the question can employment growth drop that low without leading to GDP growth going negative?)
“With accounting for temporary census workers, m/m growth is fairly anemic” – Menzie Chinn.
OK but unlike Bert – he got the data right:
Census 2020 temporary and intermittent workers and Federal government employment
https://www.bls.gov/ces/tables/census-temporary-intermittent-workers-government-employment.htm
Employment = 27 thousand is not 1 million!
Spencer did us a service by his post on Census employment. Check it out!
Anemic means lacking in vitality. As a medical term it denotes deficiency.
How can employment growth greater than population growth (accounting for long term EPOP) be deficient?