Monday, December 6, 2021

Scenes from the November jobs report: what sectors are hurting the least, and most, from the pandemic

 

 - by New Deal democrat

As I wrote on Friday, I strongly suspect that the relatively lackluster 210,000 jobs report for November will be revised substantially higher in the next two months; and I have seen many others pick up on the same thing, so that’s good.

In the meantime, let’s take a look at what sectors of the jobs market are already in pretty good shape, and which are still hurting.

Overall, jobs are down 3.912 million, or -2.6% since February 2020, right before the pandemic hit. When we divide this between the goods and services sectors, we see that goods-production jobs are down 413,000, or -2.0%, while services providing jobs are down 3.499 million, or -2.7%:


But let’s break this down further, between sectors down only slightly, sectors still hit hard, and a few that are actually higher than before the pandemic.

Taking the last first, finance (blue) and residential building jobs (red) are up 57,000 and 49,000, or +0.9% and +5.8%, respectively:


A number of other sectors are only down slightly or relatively slightly from before the pandemic: professional and business services, -69,000 (-0.3%), manufacturing, -253,000 (-2.0%), and total construction, -115,000 (-1.5%), and health care, -450,000 (-2.7%):


Sectors with moderate losses include educational services, -156,000 (-4.1%), government, -936,000 (-4.1%), and local education, -386,000 (-4.9%):


Finally, the hardest hit sectors include leisure and hospitality, -1,334,000 (-7.9%), the food and beverage component of leisure and hospitality, -757,000 (-6.1%), temporary help services, -153,000 (-5.2%), state government education, -198,000 (-7.6%) and mining and logging, -45,000 (-6.5%):


Note some of these overlap or are subcategories of other listed sectors. A few are large numbers but smaller percentage losses (manufacturing, health care), while a few are small numbers but large percentage losses (mining and logging, temporary help, state government education).

In general the sectors that have taken the biggest hit are leisure and hospitality, education, and perhaps surprisingly, health care. What these have in common is that they are where consumers or, in the case of education, government authorities, sense the most danger from the pandemic.

That’s probably a big reason why, as Prof. Menzie Chinn wrote over the weekend, real wages for leisure and hospitality workers have risen so much, even comparatively, since the pandemic began:


As I headlined Friday, the only thing preventing a complete employment recovery from the pandemic is the pandemic itself.

Saturday, December 4, 2021

Weekly Indicators for November 29 - December 3 at Seeking Alpha

 

 - by New Deal democrat

My “Weekly Indicators” post is up at Seeking Alpha.

After a long time of very few if any weekly changes among the indicators, there were three changes this week, and several other indicators that are close to changing as well.

Or, as the title to this week’s post says, there are “changes afoot.”

As usual, not only will clicking over and reading bring you up to the virtual moment as to what those changes are and what they might mean, but it will also reward me a little bit for the efforts I put in to bring you that information in an organized format.

Friday, December 3, 2021

November jobs report: the only thing keeping the jobs market completely recovering to pre-pandemic levels, is the pandemic itself

 

 - by New Deal democrat

One month ago, we got very large upward revisions to previous data. This month the big questions I had were whether that would continue, and whether the bulge decrease in new jobless claims to a half century low would translate to another big top line number in the jobs report. Additionally, in view of the recent inflation numbers, I wanted to see if wage growth would hold up. 

The 6 month average of monthly gains as of now is 612,000: less than one month ago, but still very goodnot bad. But we still have 3.9 million jobs to go to equal the number of employees in February 2020 just before the pandemic hit. The largest share of this is in jobs that employees and/or their potential customers consider still to be unsafe.

Here’s my synopsis of the report:

HEADLINES:
  • 210,000 jobs added. Private sector jobs increased 235,000, but government shed -25,000 jobs. The alternate, and more volatile measure in the household report indicated a HUGE gain of 1,136,000 jobs, which factors into the unemployment and underemployment rates below.
  • The total number of employed is still -3,912,000, or -2.6% below its pre-pandemic peak.  At this rate jobs have grown in the past 6 months (which have averaged 612,000 per month), it will take another 6 or 7 months for employment to completely recover.
  • U3 unemployment rate declined -0.4% to 4.2%, compared with the January 2020 low of 3.5%.
  • U6 underemployment rate declined -0.5% to 7.8%, compared with the January 2020 low of 6.9%.
  • Those not in the labor force at all, but who want a job now, declined 119,000 to 5.859 million, compared with 5.010 million in February 2020.
  • Those on temporary layoff decreased -255,000 to 801,000.
  • Permanent job losers declined -205,000 to 1,921,000.
  • September was revised upward by 67,000, while October was revised upward by 15,000, for a net gain of 82,000 jobs compared with previous reports.
Leading employment indicators of a slowdown or recession

These are leading sectors for the economy overall, and will help us gauge how strong the rebound from the pandemic will be.  These were positive:
  • the average manufacturing workweek, one of the 10 components of the Index of Leading Indicators, rose 0.1 hour to 40.4 hours.
  • Manufacturing jobs increased 31,000. Since the beginning of the pandemic, manufacturing has still lost -253,000 jobs, or -2.0% of the total.
  • Construction jobs increased 31,000. Since the beginning of the pandemic, -115,000 construction jobs have been lost, or -1.5% of the total.
  • Residential construction jobs, which are even more leading, rose by 4,100. Since the beginning of the pandemic, 49,100 jobs have been *gained* in this sector, or +5.8%.
  • temporary jobs rose by 6,200. Since the beginning of the pandemic, there have still been 153,000 jobs lost, or -5.2% of all temporary jobs.
  • the number of people unemployed for 5 weeks or less decreased by -113,000 to 1,972,000, which is now *lower* than just before the pandemic hit.
  • Professional and business employment increased by 90,000, which is still -69,000, or about -0.3%, below its pre-pandemic peak.

Wages of non-managerial workers
  • Average Hourly Earnings for Production and Nonsupervisory Personnel: rose $0.12 to $26.40, which is a 5.9% YoY gain. This continues to be excellent news, considering that a huge number of low-wage workers have finally been recalled to work. 

Aggregate hours and wages:
  • the index of aggregate hours worked for non-managerial workers rose by 0.2%, which is a  loss of -2.3% since just before the pandemic.
  •  the index of aggregate payrolls for non-managerial workers rose by 0.6%, which is a gain of 7.3% (before inflation) since just before the pandemic.

Other significant data:
  • Leisure and hospitality jobs, which were the most hard-hit during the pandemic, gained 23,000 jobs, but are still -1,334,000, or -7.9% below their pre-pandemic peak.
  • Within the leisure and hospitality sector, food and drink establishments gained 11,000 jobs, and is still -756,600, or -6.1% below their pre-pandemic peak.
  • Full time jobs increased 954,000 in the household report.
  • Part time jobs increased 42,000 in the household report.
  • The number of job holders who were part time for economic reasons declined by -137,000 to 4,286,000, which is a *decrease* of -112,000 since before the pandemic began.

SUMMARY

Once again this month was a tale of two very different reports: a lackluster establishment report and a blockbuster household report! I will go out on a limb and state with great confidence that over the next two months the relatively poor establishment number is going to be revised considerably higher, just as the original lackluster reports of August and September were - and like almost every other report this year has been to some extent.

The biggest part of the disappointment in the establishment report was that food and drink, and more broadly leisure and hospitality, added almost no jobs, in contrast with the huge gains earlier this year. Temporary job gains were also lackluster. By contrast, gains in professional and business jobs and construction jobs were par for the last 12 months, while gains in manufacturing were a little light.

But the declines in the unemployment and underemployment rates were stellar, with the former only 0.7% above its pre-pandemic low and the latter only 1.0% above its pre-pandemic low as well. The even broader metric of those who are not in the labor force but want a job now is only about 1 million above its pre-pandemic low as well.

Wages continue to increase sharply. Aggregate payrolls are excellent compared with pre-pandemic levels.

As I wrote yesterday in connection with jobless claims, at this point the *only* thing keeping employment from exceeding its pre-pandemic highs is the pandemic itself. With nearly 30% of American adults absolutely refusing to get vaccinated, congested indoor activities - especially unmasked ones like dining - continue to be viewed as unsafe by most other Americans. The final pieces of the employment picture will not resolve until the pandemic is resolved, and that won’t happen with a population of nearly 100,000,000 COVIDiots.


Thursday, December 2, 2021

Continuing jobless claims fall below 2 million

 

 - by New Deal democrat


The star of the show this week was continuing claims, which finally declined below 2,000,000, as they recorded a new pandemic low of 1,956,000: 



Since 1974, only two weeks in the late 1980s, and the last 3 years of the last expansion were below this number:

Meanwhile, Initial claims as expected had a post-Thanksgiving seasonal-distortions-driven rebound of 28,000 to 222,000. The 4 week average declined -12,250 to 238,750, the lowest since 1973 except for late 2017 through February 2020:

There simply is no getting around that we are in a labor market Boom at this point. The only thing holding back a full recovery in employment to its pre-COVID level is the continued pandemic itself. 

Wednesday, December 1, 2021

Manufacturing still red hot; construction still very cool

 

 - by New Deal democrat

Our first November data is out this morning with the forward-looking ISM manufacturing report for October, as well as construction spending for October.


Let’s take the ISM report first, since it is an important short leading indicator for the production sector, and in particular its new orders subindex. In November the index rose slightly from 60.8 to 61.1, as did the more leading new orders subindex, which rose from 59.8 to 61.5 (note the breakeven point between expansion and contraction is 50):


Both the total index and the new orders subindex have been running extremely hot almost all year, and there is simply no sign of a significant softening yet. This forecasts a strong production side of the economy through mid year 2022.

Turning to construction, during October in nominal terms overall spending including all types of construction rose 0.2%, from an upwardly revised -0.1% for September, while spending on the leading residential sector declined  -0.5%,  and is off -0.8% from its June peak:


Adjusting for price changes in construction materials, which jumped by 1.2% in October, “real” construction spending declined -1.0%m/m, and “real” residential construction spending declined -1.7%. In absolute terms, “real” construction spending has declined sharply - by -18.4%) - since its peak in November 2020,  while “real” residential construction spending has declined -15.5% since its post-recession peak in January of this year:


While total construction spending declined by more than it had before the Great Recession, the decline in residential construction spending, while increasingly substantial, remains nowhere near the big decline it suffered before the end of 2007, in this series that only dates from 1993. Comparing it with single family permits:




Confirms the slowdown, but no recession level decline, shown by the latter.