Friday, June 5, 2015

May jobs report: the score is consumer expansion 1, industrial recession 0

- by New Deal democrat


  • 280,000 jobs added to the economy
  • U3 unemployment rate up +0.1% to 5.5%
With the expansion firmly established, the focus has shifted to wages and the chronic heightened unemployment.  Here's the headlines on those:

Wages and participation rates
  • Not in Labor Force, but Want a Job Now: down  -200,000 from 6.258 million to 6.058 million
  • Part time for economic reasons: up +72,000 from 6.580 million to 6.652 million
  • Employment/population ratio ages 25-54: unchanged at 77.2% 
  • Average Weekly Earnings for Production and Nonsupervisory Personnel: up +0.3% from $20.91 to $20.97,  up +2.0%YoY. (Note: you may be reading different information about wages elsewhere. They are citing average wages for all private workers. I use wages for nonsupervisory personnel, to come closer to the situation for ordinary workers.)
March was revised up by +34,000, butApril was revised down by -2,000, for a net change of +32,000.

The more leading numbers in the report tell us about where the economy is likely to be a few months from now. These were virtually all positive, or at worst neutral, after 3 negative months.

  • the average manufacturing workweek was unchanged at 40.7 hours, but April was revised down -0.1.  This is one of the 10 components of the LEI and so will affect it negatively (for April).

  • construction jobs rose by 17,000. YoY construction jobs are up 273,000.  

  • manufacturing jobs rose 7,000, and are up 175,000 YoY.
  • Professional and business employment (generally higher-paying jobs) rose 64,000 and are up  673,000 YoY.

  • temporary jobs - a leading indicator for jobs overall - rose by 20,100.

  • the number of people unemployed for 5 weeks or less - a better leading indicator than initial jobless claims - decreased by 311,000 to  2,418,000, compared with December 2013's low of 2,255,000.

Other important coincident indicators help us paint a more complete picture of the present:

  • Overtime was unchanged at 3.3, from an upwardly revised April.

  • the index of aggregate hours worked in the economy rose 0.3 from 103.0 to 103.3.

  • The broad U-6 unemployment rate, that includes discouraged workers was unchanged at    10.8%
  • the index of aggregate payrolls rose by 0.6% from an upwardly revised 123.0 to 103.3.
Other news included: 
  • the alternate jobs number contained in the more volatile household survey increased by 189,000 jobs.  This represents an increase of 2,833,000 million increase in jobs YoY vs. 3,058,000 in the establishment survey. 

  • Government jobs increased by 18,000.
  • the overall employment to population ratio for all ages 16 and above rosse +0.1 59.4%,  and has risen by +0.4% YoY. The labor force participation rate also rose 0.1% fr om 62.7% to 62.9%  and is unchanged YoY (remember, this includes droves of retiring Boomers).


This was an almost perfect report.  Almost everything moved, significanlty, in the right direction.  About the only negatives were an increase in part time for economic reasons employment, and a slight increase in the unemployment rate, but that was due to an increase of people entering the workforce.

Last month the leading portions of the employment report were sounding an alarm. This month that was all reversed. Only the continuing decrease in mining jobs, -65,000 so far this year, demonstrated the continuing effects of the very strong dollar on exports, but this was swamped by the positive news everywhere else.

 So the takeaway from this report is that the consumer expansion is outscoring the shallow industrial recession.