Relevant and even prescient commentary on news, politics and the economy.

The Employment Situation


Although the July employment report was weaker than expected, it was still in line with recent experiences. The household survey reported employment gains of 204,000 while the payroll report showed a gain of 162,000 jobs.

Clipboard01 CHANGE

Average hourly earnings for all employees on private nonfarm payrolls edged down by 2 cents to $23.98, following a 10-cent increase in June.

Employment Situation

The headline numbers in the employment report were very weak as  payroll employment rose by only 88,000  and the household survey reported a -206,000 drop in employment while the labor force fell by -496,000.  The futures markets are reacting very badly.  But the workweek expanded and aggregrate hours worked increased 0.3% as compared to 0.5% last month.

Private payrolls grew  96,000  and government employment fell 7,000 implying that the sequester is not yet having a significant impact.

After falling to  below trend last year hours worked is now back on the 0.2% trend displayed earlier in the cycle.   So basically it looks like the headline numbers are overstating the weakness.

Interestingly, my bond valuation model still says that the 10 year T Bond yield should be about 1.5%.
 The model still has fed funds in it, but  nothing else to capture other measure of fed policy..

Average hourly earnings were essentially unchanged last month, but the smoothed data still implies that wage gains have bottomed.

Average weekly earnings also still looks like it has  bottomed.

The Great Recession captured in 1 minute of comedy

Just watch this.  It is 1 minute long.

Could it be anymore surreal?


Obviously, the lesson has not been relearned since at least sometime before 1992.  If it had been relearned, we would not be here still proposing solutions that sound just like, almost word for word like the 1920’s.  (start reading at 1920) I mean, it’s not like people haven’t been sounding the horn on what the results would be from the proposed solutions in 1992.   Nope, it’s the same proposals as in 1992, which will produce more of the same.



At first glance the December employment report shows that the trends throughout 2012 were unchanged in December.  But within the report there were some greater signs of strength.

Private payroll employment showed a gain of 155,000 and the household survey reported a much smaller gain of only 28,000.  These changes are about the same  as they have been all year.

Private payroll employment was up 166,000 as government employment fell again.

But on a year over year change the two reports are still showing very similar gains.

 The workweek increased from 33.7 to 33.8  the second consecutive month of  a 0.4% gain.

As a result, the index of aggregrate hours worked rose 0.5% after a 0.4% jump last month.

These are some of the largest gain this cycle and the chart shows how the rate of gain is moving back up to the trend experienced earlier in the cycle.

Moreover, average hourly earnings rose 0.3%.   The year over year increase and the smoothed three month growth rate strongly suggest that wage growth is bottoming.   This is good news.  But on the other hand it is exactly the type of change the inflation hawks are warning us about

The Employment Situation

The employment report was better than expected as Sandy apparently did not have the widely expected negative impact.  But the data essentially shows that the recent trend of weak employment continued as payrolls expanded some 146,000 and the household survey showed a -122,00 drop.

Private payrolls expanded some  147,00 as government employment fell about 1,000.  The expansion of private payrolls  was within the range of recent reports.

The year over year change in both measures — to smooth out monthly noise — is still about the same..


The unemployment rate fell to 7.7% , but the drop was due more to -350,000 contraction in the labor  force than higher employment.


The average workweek was stable at 33.4 hours and the index of aggregrate hours worked rose 0.2%.
For production or nonsupervisory hours worked expanded 0.4%– a little better than the total.

 Average hourly earnings  rose from $23.59 to $23.69.  But its growth is still at record lows.

Average weekly earnings growth remained very weak at about  1.7%.  This is in sharp contrast to the widespread expectations  that income will spike higher in the 4th quarter as individuals shift income from 2013 back to 2012 to avoid or minimize the expected tax rate increase in 2013.But the hourly wage employees in this report have little or no ability to shift income.


The Employment Situation

This was another mixed employment report.  The headline increase of 171,000 increase in payroll employment and 410,000 rise in employment reported in the household survey appeared strong.  But  other signs of weakness appeared within the report.

The 184,000 increase in private payroll employment was the strongest since February.

The unemployment rate ticked up from 7.8 to 7.9.  But this may actually be a bullish development because it stemmed from a 578,000 jump in the labor force.  A large increase in the labor force may mean that people are more optimistic about employment prospects and are rejoining the labor force.
Moreover, the number of people working part time for economic reasons fell -304,000.

But the  work week fell from  33.7 to 33.6 and the index of aggregate hours works fell -0.1 from 103.8 to 103.7.  Relative to the trend establish early in this cycle, hours worked has been weak for several months..

Moreover average hourly earnings was essentially unchanged as it fell from $19.80 to $19.79..
The growth in average hourly earnings plunged to  1.2%, an all time record low.


Average weekly fell from $667.26 to $664.94 and the year over year growth rate was only 1.2%, the smallest gain in this cycle.

Correction: I originally enter the weekly wage data in the hourly earnings  comment.
 I corrected this and added the weekly wage data in the proper place. 


The employment situation was mixed with the headline number, payroll employment adding 114,000 and the household report showing a gain of 873,000.

To a great extent the very large increase in the household survey appears to be just a make up for earlier weakness when the payroll report was showing larger gains than the household survey.  On a year over year basis the two reports are showing very similar gains.

With the very large gain in the household survey the unemployment rate fell to 7.8%.  It is now lower than when Obama took office.  In the modern era every democratic administration saw the unemployment rate fall during their term in office while only one Republican saw the unemployment rate lower when they left office than it was when they took office.  That was Reagan.

Interestingly, the unemployment rate for those with less than a high school showed a very large drop  When I first saw the very large gain in the household survey I though it might be the seasonal adjustment creating a very large gain in education employment, but that was not the case.

The average work week increased from 34.4 to 34.5.  Together with the gain in employment this generated a 0.6 % increase in aggregate hours worked.

Average hourly earnings increased from $23.51 to $23.58, or 0.3%.

Together this generated a 0.6% increase in average weekly earnings, the largest monthly gain in this cycle.

Employment Situation

The August employment report shows the economy continuing with its very sluggish pace. Although the unemployment rate fell it was due more to a contracting labor force rather than expanding employment. The household survey showed a drop of some 119,000 while the payroll or headline data increased only 96,000 — private rose 103,000 while government employment fell 7,000.

Moreover,  the workweek was unchanged so the index of aggregate hours worked only rose 0.1%.


Average hourly earnings was unchanged and the year over year change remained at last months record
low.    Average weekly earnings for nonsupervisory workers only rose 1.6% over the last years while for all private workers the gain was 2%



Mixed Messages on employment situation

Some other insights on the data in addition to Angry Bear Spencer England:

Mixed Message on the Labor Front

BLS released its Employment Situation Summary for July. The payroll survey showed an increase in employment of $163 thousand but that unemployment rate rose to 8.3%. So what was the deal from the household survey? Actually the labor force participation rate fell from 63.8% to 63.7% so the small rise in the unemployment rate masks the fact that the employment to population rate fell from 58.6% to 58.4%. The household survey indicates that employment dropped by 195 thousand last month. So I’m sure the political hacks will have lots to debate on this news. But one thing is crystal clear – we are still far below full employment. This Administration and the Federal Reserve need to do a lot more in terms of stimulus. Of course the Republicans are proposing even more fiscal austerity. Go figure!
run75441 said…
Truly this is not good news. If U# goes up, Particpation Rate increases because people started looking for work again. What you are saying is U3 went up at the same time Participation Rate dropped (more people quit looking). August 3, 2012 10:20 PM

At Bonndad, New Deal Democrat points to the data suggesting new unemployment claims as a leading indicator is much diminished.