Friday, February 5, 2016

January jobs report: an hours, wages, and participation surge under the headlines

- by New Deal democrat


  • 151,000 jobs added to the economy
  • U3 unemployment rate down -0.1% to 4.9%
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 87,000 from 5.886 million to 5.973 million
  • Part time for economic reasons: down 34,000 from 6.022 million to 5.988 million
  • Employment/population ratio ages 25-54: up +0.3% from 77.4% to 77.7% 
  • Average Weekly Earnings for Production and Nonsupervisory Personnel: up $.06 from $21.27 to $21.33,  up +2.-%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.)
November was revised upward by 28,000.  December was revised downward by 30,000, for a net change of -2,000. 

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

  • the average manufacturing workweek rose from 41.6 hours to 41.7 hours.  This is one of the 10 components of the LEI and will be a positive.
  • construction jobs 18,000.  YoY construction jobs are up 264,000.  
  • manufacturing jobs increased by 29,000, and are up 45,000 YoY.
  • Professional and business employment (generally higher-paying jobs) increased by 9,000 and are up 620,000 YoY.

  • temporary jobs - a leading indicator for jobs overall decreased by -25,200.

  • the number of people unemployed for 5 weeks or less - a better leading indicator than initial jobless claims - decreased by -156,000 from 2,405,000 to 2.249,000.  The post-recession low was set 5 months ago at 2,095,000.

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

  • Overtime was unchanged at 3.3 hours.

  • the index of aggregate hours worked in the economy rose by 0.4 from  104.9 to 105.3. 
  • The broad U-6 unemployment rate that includes discouraged workers was unchanged at 9.9%.
  •  the index of aggregate payrolls rose by 0.9  from 126.9 to 127.8.
Other news included:      
  • the alternate jobs number contained in the more volatile household survey increased by 615,000  jobs.   This represents an increase  of 2,440,000  jobs YoY vs. 2,665,000 in the establishment survey.  
  • Government jobs fell by -7,000.  
  • the overall employment  to  population ratio for all a ges 16 and above rose by .1 to 59.6  m/m and +0.3% YoY.  The labor force participation rate rose  0.1% from 62.6%  to  62.7%  and is down -0.2 % YoY (remember, this incl udes droves of retiring Boomers).  

The headline employment number was a little light this month, but look at the great internals:

  • average wages rose smartly
  • aggregate hours also rose smartly
  • wages and hours for December were revised upward.  This means that real aggregate wages had a big increase, probably over 1% in just one month.
  • part time for economic reasons declined
  • the employment population ratio for prime working ages 25 54 rose by 0.3% and has finally made up more than 1/2 of its loss from the Great Recession

There were only a few negatives:

  • the broad U6 unemployment rate did not fall
  • those not in the labor force who want a job now rose
  • temporary jobs fell

Bottom line:  January was a great month for workers' paychecks. Finally!