Sunday, September 15, 2019
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From Robert Hughes over at the American Institute for Economic Research.
U.S. nonfarm payrolls added 130,000 jobs in August, below the consensus expectation of 158,000. The prior two months were revised down, showing gains of 159,000 and 178,000 for July and June, respectively. The three-month average from June to August was 156,000, well below the 199,000 average since 2011, but still a decent performance. Despite the slowdown in jobs growth, hourly earnings rose, the length of the workweek increased, the unemployment rate held steady and the participation rate rose. Overall, the report provides mixed signals.
Notes on the U.S. Employment Situation for August 2019: Unemployment Rate Remains at 3.7% while Payrolls Increase by 130,000
OVERVIEW
Today’s payrolls report failed to meet expectations and added fuel to speculation about an economic slowdown, if not a pending recession difficult to predict. Wall Street expected 165,000, the BLS printed 130,000.
Earlier this week, ADP estimated private jobs at 195,000, the BLS today said the private sector created 96,000 new jobs.
Once again, revisions to the previous two months dampened the job growth. Today’s three-month monthly average in payrolls trended down to 156,000 — far below the 2018 average of 223,000 jobs per month. The report looks worse if one examines the short-term hiring of census workers by the federal government (+25,000.) In August, 1.6 million persons were not in the workforce but wanted and were available for work and sought employment in the last year. This group is known as the “marginally attached to the labor force.”
Retail trade has lost 80,000 jobs over the year. And, even the high-flying Professional and Business Services sector is slowing down. The monthly average of 34,000 in 2019 for this sector is below the average monthly gain of 47,000 in 2018.
However, the nation’s Labor Force Participation rate rose to 63.2 percent, an encouraging sign. The Employment-Population ratio is the highest since 2008. "Here we have interesting data, because the headline increase in payrolls is disappointing," wrote Jefferies’ Thomas Simons, minutes after the BLS release. "That being said, all of the peripheral data is really pretty good."
The good data shows up in the continuing increase in average hourly earnings. Private non-farm workers now earn $28.11 per hour, representing at 12-month gain of 3.2 percent. Economists were expecting a 3.0 year-over-year gain. The wages in the Information sector saw hourly rates increase 5.5 percent (to $42.37 per hour).
Those gains are still lagging the increases in worker productivity (see Figure 1). This “productivity gap,” which began in the 1970s, has stymied economists who grasp for various solutions such as restoring workers’ bargaining power through unionization. These strategies may be like pushing a string as technology, namely automation is aggravating the decline in labor’s share.
- Total non-farm payroll employment in August increased by 130,000 and the unemployment rate remained at 3.7 percent for the third consecutive month, according to the Bureau of Labor Statistics.
- The Labor Force Participation (LFP) rate rose to 63.2 percent. The Employment-Population ratio also rose slightly to 60.9 percent and has increased 0.6 percent over the year.
- Professional and Business Services (+37,000) and Federal Government (+28,000) led all sectors in August. Health Care moved up (+24,000).
- Financial Activities added 15,000 jobs with half the gain taking place in the insurance carriers and related activities sub-sector.
- Construction also changed little over the month.
- Employment in other industries also did not change from July to August: Construction, Manufacturing, Transportation and Leisure and Hospitality changed little.
- Mining and Retail Trade lost jobs by 6,000 and 11,000, respectively.
- Average hourly earnings rose by 11 cents to $28.11. Since August 2018 wages are up 3.2 percent.
- In August, the average workweek for all employees increased to 34.4 hours.
- The number of persons employed part-time was increased in August to 4.4 million from 4.0 million. The number of long-termed unemployed (greater than 27 weeks) remained unchanged at 1.2 million and accounted for 20.6 percent of all unemployed.
- Revisions to the two previous months counted 20,000 less jobs than reported initially. June 2019 was revised down by 15,000 from +193,000 to +178,000 and July 2019 was revised down 5,000 from +164,000 to +159,000.
Today’s payrolls report failed to meet expectations and added fuel to speculation about an economic slowdown, if not a pending recession difficult to predict. Wall Street expected 165,000, the BLS printed 130,000.
Earlier this week, ADP estimated private jobs at 195,000, the BLS today said the private sector created 96,000 new jobs.
Once again, revisions to the previous two months dampened the job growth. Today’s three-month monthly average in payrolls trended down to 156,000 — far below the 2018 average of 223,000 jobs per month. The report looks worse if one examines the short-term hiring of census workers by the federal government (+25,000.) In August, 1.6 million persons were not in the workforce but wanted and were available for work and sought employment in the last year. This group is known as the “marginally attached to the labor force.”
Retail trade has lost 80,000 jobs over the year. And, even the high-flying Professional and Business Services sector is slowing down. The monthly average of 34,000 in 2019 for this sector is below the average monthly gain of 47,000 in 2018.
However, the nation’s Labor Force Participation rate rose to 63.2 percent, an encouraging sign. The Employment-Population ratio is the highest since 2008. "Here we have interesting data, because the headline increase in payrolls is disappointing," wrote Jefferies’ Thomas Simons, minutes after the BLS release. "That being said, all of the peripheral data is really pretty good."
The good data shows up in the continuing increase in average hourly earnings. Private non-farm workers now earn $28.11 per hour, representing at 12-month gain of 3.2 percent. Economists were expecting a 3.0 year-over-year gain. The wages in the Information sector saw hourly rates increase 5.5 percent (to $42.37 per hour).
Those gains are still lagging the increases in worker productivity (see Figure 1). This “productivity gap,” which began in the 1970s, has stymied economists who grasp for various solutions such as restoring workers’ bargaining power through unionization. These strategies may be like pushing a string as technology, namely automation is aggravating the decline in labor’s share.
Figure A: The Productivity Gap: Earnings Lag Gains
Thursday, September 5, 2019
Tuesday, September 3, 2019
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