JUNE EMPLOYMENT SITUATION
The employment was bad news as payroll employment only rose by 18,000 as compared to the last months disappointing rise of 25,000. Government employment fell 39,000 versus 48,000 in
May. Private payrolls expanded only 57,000 that was even weaker than the prior months 73,000. Over the last two months payroll employment was essentially unchanged.
Moreover, the household survey reported an employment drop of -445,000. This lead to the unemployment rate rising to 9.2%
Historically the household survey tend to lead the payroll survey and the very poor performance of the household survey is extremely discouraging.
In addition the average workweek was unchanged so aggregate hours worked only expanded 0.1%
Over the last few months the index of hour worked has been:
………March……… April……… May…….. June
………100.5……… 100.7…….. 100.7 ….. 100.8
You would never know it from listening to the talking heads, but this recovery is actually stronger than the last recovery.
Average hourly earnings fell from $19.42 to $19.41. Both the year over year and compound three month growth rate of average hourly earnings is only 1.9%. Wage growth is approaching a record low.
Average wekly earnings growth also continues to slow. The year over gain is 2.5% and the three month growth rate is only 1.8%. Actually, with oil prices falling real weekly earnings ticked up month before last, the only gain in seven months. But this month average weekly earnings actually fell from $652.51 to $652.18 so unless we are experiencing deflation real wages will fall again this month. Given this weakness in wages and earnings it is extremely difficult to see where growth is going to come from.
Difficult to see where growth is going to come from? You can’t see what does not and will not exist.
$1.4 trillion per year in the hands of the top 1% no longer in the hands of the other 99%.
The only good news I can observe in my travels is that businesses are failing at a slower rate.
Not exactly what we were hoping for.
“You would never know it from listening to the talking heads, but this recovery is actually stronger than the last recovery.”
Well, employment may be recovering more rapidly, but it has further to go. Does that make the recovery stronger?
Spencer, please explain the “Hours Worked in Jobless Recoveries” chart. It differs significantly from the Aggregate Hours Chart.
Thanks. When I read the numbers, I came over to AB immediately to see if your report was up. Just want you to know I appreciate it.
Temp workers falling. Reported productivity looking like its fell in Q2. Weekly hours and overtime falling. Simplyhired.com reports job listings down going into July.
All these factors point to more labor market weakness in July.
The first hours work measures from the economic peak.
The second hours worked charts measures from the economic bottom.
All it is doing is comparing the recoveries.
Just watch the tax withholdings numbers and there is no need to read the tea leaves about employment. The employment situation has stopped improving. The bad official numbers are not a surprise.
The most important number, rendering all other employment numbers beside the point, is the population/employment number.
The only question about the numbers was what they would decide to report.
Oh, one other thing. Jobs are not a lagging indicator. They are a coincident indicator. Sometimes they lead.
I calculate monthly manufacturing productivity and it is sharply negative in the second quarter.
Shouldn’t this imply major negative earnings surprises?
So far all the attention seems to be on the payroll numbers. Other than you Spencer, I haven’t noticed a single blogger mention the fact that household employment dropped by 445,000 jobs last month.
What you failed to mention was that this is the largest drop in household employment in 18 months.
Several bloggers have mentioned the fact that the employment to population ratio dropped. What they have all failed to notice is that it dropped to 58.18%. This is the lowest rate so far this recession and is in fact the lowest rate since July of 1983 (58.06%), nearly 28 years ago.
And yet the plug has been pulled on QE, Obama still has two out of seven seats on the BOG vacant, fiscal stimulus is being rapidly withdrawn and the Republican controlled House and the President are cutting a deal for contractionary fiscal policy.
Historically the household survey leads the payroll survey. Anyone who thinks the second half of the year is going to be better than first is not thinking clearly.
Right, Mark. NancyO