Friday, December 6, 2013

November jobs report: a solid positive month (but still not good enough)

- by New Deal democrat

In November 203,000 jobs were added to the US economy.  The unemployment rate dropped sharply, down 0.3% to 7.0%  -- and for once it included an increase in the labor force as well as a decline in the number of people without jobs.  There is little in this report for Doomers to latch onto - although the percent of the working age population that is employed remains near its post-recession low, and this November's reading was 37,000 less than last November's +240,000 report.

First, let's look at the more leading numbers in the report which tell us about where the economy is likely to be a few months from now. These were all positive.
  • the average manufacturing workweek rose 0.1 hour from 40.9 hours to 41.0  hours. This is one of the 10 components of the LEI and will affect that number positively.

  • construction jobs increased by 17,000.

  • manufacturing jobs rose by 27,000.

  • temporary jobs - a leading indicator for jobs overall - increased by 16,400.

  • the number of people unemployed for 5 weeks or less - a better leading indicator than initial jobless claims - fell by 300,000 reflecting the return to work of those laid off during the government shutdown and is near its post-recession low.

Now here are some of the other important coincident indicators filling out our view of where we are now:
  • The average workweek for all nonsupervisory workers increased by 0.1 hour from 33.6 hours to 33.7 hours.

  • Overtime hours increased from 3.4 hours to 3.5 hours.

  • the index of aggregate hours worked in the economy surged by 0.5 from  98.8 to  99.3. This is also a post-recession record.

  • The broad U-6 unemployment rate, that includes discouraged workers declined from 13.8% to  13.0%, also a post-recession low.

  • The workforce rose  by 561,000. Part time jobs fell by -331,000.
Other news included:
  • the alternate jobs number contained in the more volatile household survey increased by 818,000 jobs, reversing the government shutdown -735,000 in October, for a net gain of 83,000.

  • Government jobs once again decreased by 7,000.

  • Combined revisions to the September and October reports totalled a net gain of 8,000 jobs.

  • average hourly earnings increased  $.04 to $24.15. The YoY change decreased from +2.2% to +2.0%, meaning that YoY average real wages probably actually declined in November, given the epected +0.3% rise in consumer prices..

  • the employment to population ratio increased 0.3% to 58.6%, which again just reversed October's decline likely due to the government shutdown. The labor force participation rate actually rose 0.2% to 63.0%
All in all, this was a solid report. Everything moved in the right direction, and for the right reasons.  The employment-to-population, however, remains stuck near its all time low.  There is no reason to doubt that this continues to be partly due to people simply giving up on the idea of ever working again, and partly due to burgeoning Boomer retirements.  And of course, even a solid report like this  simply isn't good enough to put a big dent in the population-adjusted lost jobs since the onset of the Great Recession.