February jobs report: the first sign of the economic slowdown spreading to jobs?

February jobs report: the first sign of the economic slowdown spreading to jobs?

HEADLINES:

  • +20,000 jobs added
  • U3 unemployment rate -0.2% from 4.0% to 3.8%
  • U6 underemployment rate  -0.8% from 8.1% to 7.3% (NEW 20 YEAR LOW)

Here are the headlines on wages and the broader measures of underemployment:

Wages and participation rates

  • Not in Labor Force, but Want a Job Now: down -32,000 from 5.254 million to 5.222 million
  • Part time for economic reasons: down -837,000 from 5.147 million to 4.510 million
  • Employment/population ratio ages 25-54: unchanged at 79.9%
  • Average Hourly Earnings for Production and Nonsupervisory Personnel: rose $.08 from  $23.10 to $23.18, up +3.5% 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.)
Is a recession close?

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

  • the average manufacturing workweek fell -0.1 hours from 40.8 to 40.7 hours. This is one of the 10 components of the LEI.
  • Manufacturing jobs rose +4,000. YoY manufacturing is up 242,000.
  • construction jobs declined -31,000. YoY construction jobs are up 373,000.
  • temporary jobs rose +5800. YoY these are up +67,000.
  • the number of people unemployed for 5 weeks or less fell by -131,000 from 2,325,000 to 2,194,000.  The post-recession low was set nine months ago at 2,034,000.
 

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 +12,000/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 increased by 100 for an average of +160/month vs. the last seven years of Obama’s presidency in which an average of -300 jobs were lost each month

December was revised upward by +5,000. January was also revised upward by +7,000, for a net change of +12,000.

Other important coincident indicators help  us paint a more complete picture of the present:
  • Overtime was unchanged at 3.5 hours.
  • Professional and business employment (generally higher-paying jobs) rose by +42,000 and  is up +537,000 YoY.
  • the index of aggregate hours worked for non-managerial workers fell by -0.6%
  •  the index of aggregate payrolls for non-managerial workers fell by -0.3%
Other news included:
  • the  alternate jobs number contained  in the more volatile household survey increased by +255,000  jobs.  This represents an increase of 1,736,000 jobs YoY vs. 2,509,000 in the establishment survey.
  • Government jobs fell by -5000.
  • the overall employment to population ratio for all ages 16 and up was unchanged at  60.7% m/m and is up 0.3% YoY.
  • The labor force participation rate was unchanged at 63.2% and is up +0.2% YoY.

SUMMARY

There are two themes to this report. The first is that it reversed both last month’s establishment and household reports. Last month the first was excellent and the second was poor. This month the establishment survey laid an egg, as featured in the headline number, while the household survey rose smartly, as featured in involuntary part time work, discouraged workers, and both the unemployment and underemployment rates. Positive news also included another good increase in non-supervisory wages.

But this month’s report actually went beyond taking back January’s report. The YoY change in construction, manufacturing, and total jobs for the last two months combined are all lower than they were in December. So we both aggregate hours worked and aggregate payrolls. The manufacturing workweek declined for the second month in a row.  It’s also worth noting that the YoY increase in the household report is significantly lagging the establishment report.

In summation, I suspect this month marked the first month in which the economic slowdown showed up in the jobs report.

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