Thursday, July 2, 2015

June jobs report: good progress on underemployment, no progress on wages

- by New Deal democrat


  • 223,000 jobs added to the economy
  • U3 unemployment rate down -0.2% to 5.3%
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: up  18,000 from 6.058 million to 6.076 million
  • Part time for economic reasons: down  -147,000 from 6.652 million to 6.505 million
  • Employment/population ratio ages 25-54: unchanged at 77.2% 
  • Average Weekly Earnings for Production and Nonsupervisory Personnel: up +0.1% from $20.97 to $20.99,  up +1.9%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.)
April was revised down by -34,000.  May was also revised down by -26,000, for a net change of -60,000.

The more leading numbers in the report tell us about where the economy is likely to be a few months from now. These were mixed.

  • the average manufacturing workweek declined from 41.8 hours to 41.7 hours.  This is one of the 10 components of the LEI and so will affect it negatively.

  • construction jobs were unchanged. YoY construction jobs are up 259,000.  

  • manufacturing jobs rose by 4,000, and are up 161,000 YoY.
  • Professional and business employment (generally higher-paying jobs) rose by 64,000 and are up  642,000 YoY.

  • temporary jobs - a leading indicator for jobs overall - rose by 19,100.

  • the number of people unemployed for 5 weeks or less - a better leading indicator than initial jobless claims - fell by -63,000 to  2,355,000, 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 rose +0.1 hours to 3.4 hours.

  • the index of aggregate hours worked in the economy rose +0.2 to 103.4. 
  • The broad U-6 unemployment rate, that includes discouraged workers declined -0.3% from 10.8% to 10.5%.
  •  the index of aggregate payrolls rose by 0.3% from 122.9 to 123.2.
Other news included:   
  • the alternate jobs number contained in the more volatile household survey increased by  208,000 jobs.  This represents an increase of 2,849,000  million increase in jobs YoY vs. 2,935,000 in the establishment survey.  

  • Government jobs were unchanged.
  • the overall employment to population ratio for all ages 16 and above fell by -0.1%  to  59.3%,  and has risen by +0.3% YoY. The labor force participation rate fell by -0.3% fr om 62.9% to 62.6%  and is down -0.2% YoY (remember, this incl udes droves of retiring Boomers).


This report featured good headlines with imixed internals. The downward revisions to thise year's past data has become, with one exception, a trend. We are also making no progress on the wage or participation fronts.  On the other hand, we are continuing to make progress converting part time to full time workers.  This, along with the decline in the U6 unemployment number, suggests we are cotniuing to make (too slow) progress towards the point where wages finally begin to grow appreciably.