The Employment Situation

By recent norms this was an unusual employment report in that the data worked the way we would like to see.

In the household survey the unemployment rate fell to 7.5% because the labor force rose by 210,000 while employment increased a larger 293,00 so the number of unemployed fell by -83,000.

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The payroll employment was within the range of recently reported data while the household survey showed a very large employment increase.

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But on a year over year basis the payroll numbers are showing significant weakness.

 

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In contrast to last month when the headline numbers overstated the weakness, this month the headline numbers are over stating the strength.  The workweek fell from 34.6 to 34.4 hours.  As a consequence the index of aggregate hours worked fell -0.4%, offsetting last months 0.4% increase.

 

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Moreover, average hourly earnings were weak.  They rose from $23.83 to $23.87, or only 0.01%.

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The combination of weak wage growth and a shorter workweek meant that  average weekly wages fell from m$824.53 to $821.13.  This measures accounts for some 80% of the labor force and implies that consumer spending growth  will continue to depend heavily on  upper income spending.

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