Friday, August 3, 2012

July jobs +163,000, unemployment rises, leading indicators stable to positive

- by New Deal democrat

July employment was reported well ahead of expectations at +163,000.  Private payrolls were up 172,000, government lost -9,000 jobs.  Revisions were a wash, with May's jobs figure revised up10,000 and June's down 16,000.

The unemployment rate, however, increased to 8.3% and the broader U-6 rate increased for the second month in a row, up now to 15.0%.

The alternate, more volatile household survey jobs number actually decreased, -195,000, as those not in the labor force and the number of unemployed actually increased slightly.  This brought the labor force participation rate down 0.1% to 63.7%, and the employment to population ratio down 0.2% to 58.4%.

Those parts of the labor report that tend to lead the economy were slightly positive or neutral.  Manufacturing jobs increased by 25,000.  Note that this seasonal adjustment may have been affected by the auto plant shutdown issue. Construction employment was up 4,000 (which, considering the last 5 years, is good).

The manufacturing work week, one of the 10 official leading indicators, was flat at 40.7 hours.  Manufacturing overtime was also flat at 3.7 hours. The work week economy-wide was also flat at 34.5 hours.  Another aspect of the report thought to be leading, temporary jobs, increased by 14,000.

The leading part of the unemployment data is those out of work less than 5 weeks.  This declined by 99,000, and is now only about 150,000 above its low from last year.  Usually going into a recession this has increased by at least 300,000 off its lows.

Average hourly earnings increased a pathetic but positive 0.1%.  These have increased 1.7% in the last 12 months.  Depending on how the July CPI is reported later this month, this might be the first YoY increase in real average hourly earnings in the last 18 months.

Compared with the negatively dramatic reports of the last few months, this one is relatively "meh," which under the circumstances, is a positive.  In summary, more jobs were created than necessary to keep up with population growth, leading industries were positive, short term unemployment were positive.  The ratio of unemployed to employed and to the population grew, a negative.  Most of the rest of the report was flat, neither good nor bad.

P.S.:  Appropos of my latest critique of ECRI's recession call the other day, the YoY% change in employment growth increased to a 4 month high.  For the moment, this means that 3 of the 4 coincident indicators used to signal expansion vs. recession are not just growing, but growing at an increasing rate.