« Back

The Employment situation

Spencer England | August 3, 2012 9:54 am

The headline number of a 163,000 increase in payroll employment –172,000 private and a -9,000 fall in government –appeared strong. But it was really just another .weak employment report. For example over the last twelve months private payroll employment gains have average some 163,000 so this months 172,000 increase was just barely above the 12 month moving average.

The increase in jobs since the recession bottom remains very weak by historic standards, but it is still stronger than in the early 2000s cycle.

But the workweek was unchanged at 34.5 hours. The manufacturing workweek and over time hours were also unchanged. Consequently the index of aggregate hours worked for all employees only rose 0.1%, versus a 0.4% gain last month and a -0..2 drop in the previous month. Hours worked for production, or nonsupervisory workers only rose 0.1%, the same as in the last two months. Both measures are now growing slower than the 0.2% average monthly gain established earlier in the cycle.

Average hourly earnings for nonsupervisory workers rose from $19.75 to $19.77. This is a 1.28% increase over the past year, the smallest annual gain on record. Weekly earnings are also only up 1.28% over the past year. The major risk to the economy remains that weak earnings feed into weak consumer spending that feeds back into weak hiring and wages in a downward spiral.

1 Comment

kharris says:

August 3, 2012 at 3:54 pm

Data of this sort represent a sort of ded reckoning exercise. We are trying to know roughly where we are, because the instruments we employ aren’t good enough to know precisely. Trouble is, the seasonal correction for July is so large that you have to make far greater allowance for the fact that you don’t know where you are. The non-adjusted loss in employment was 1.204 mln. The adjusted rise was 163k. The reported gain is only about 14% the size of the drop in July, prior to seasonal adjustment.

All of which is to say, we ought to be looking at averages over a few months rather than depend on one month’s print. The 3-month average says we aren’t adding nearly enough jobs.

The household survey reportes the largest job loss in 13 months, but again if we average over 3 months, what we see is that there is job growth, but it’s slowing.