Friday, September 3, 2010

The Employment Report, Part 1

From the BLS:

Nonfarm payroll employment changed little (-54,000) in August, and the unemployment rate was about unchanged at 9.6 percent, the U.S. Bureau of LaborStatistics reported today. Government employment fell, as 114,000 temporaryworkers hired for the decennial census completed their work. Private-sector payroll employment continued to trend up modestly (+67,000)

Let's start with the household survey.

The civilian, non-institutional population increased by 209,000. This is the denominator of several important macro statistics.

The civilian labor force increased 550,0000, for an increase in the labor force participation rate of .1%, increasing from 64.6% to 64.7%.

The number of unemployed increased 261,000, leading to an increase in the unemployment rate of .1%, increasing the level from 9.5% to 9.6%.

The number of employed increased by 290,000, for an increase of the employment to population ration of .1% or a rise from 58.4% to 58.5%.

The increase in the labor force tells us the more people moved back into the labor force. There are far too many reasons for this to ascribe a good or bad label to it.

It is important to remember that with the workforce getting older, we will start to see a decrease in the employment to population ratio and the labor force participation rate.

Let's move onto the establishment survey.

Total private hiring increased 61,000, 107,000 and 67,000 over the last three months. This is not an inspiring series of numbers and indicates that employers are extremely cautious about something.

Goods producing job gains stood at 0 as increases in mining and construction were offset by decreases in manufacturing. The decreases in manufacturing are consistent with the lower numbers we have been seeing in various regional manufacturing surveys over the last few months.

The service sector was responsible for all of the gains in the work force, accounting for 67,000 jobs. The bulk of these jobs came in the professional service category (+20,000) and education and health care services (+45,000). This number has printed at 60,000 and 70,000 for the preceding two months -- again, a very uninspiring series of numbers.

Government employees are responsible for the bulk of all the job losses for the last three months, as this category of employment has decreased by 236,000, 161,000 and 121,000 for the last three months, respectively.

On a scale of 1-10, I'd give this about 3.5. The private sector is hiring, but just barely. Manufacturing -- which led us out of the recovery -- is slowing and the service sector is having difficulty picking up the slack.