Friday, July 8, 2016

June jobs report: June takes back May, but deceleration remains

- by New Deal democrat

  • +287,000 jobs added (would have been 252,000 except for Verizon strike)
  • U3 unemployment rate rose from 4.7% to 4.9%
  • U6 underemployment rate rose from 9.7% to 9.8%
Here are the headlines on wages and the chronic heightened underemployment:

Wages and participation rates
  • Not in Labor Force, but Want a Job Now:  declined -231,000 from 5.923 million to 5.692 million
  • Part time for economic reasons: declined -587,000 from 6.430 million to 5.843 million
  • Employment/population ratio ages 25-54: unchanged at 77.8% 
  • Average Weekly Earnings for Production and Nonsupervisory Personnel: up +$.04 from $21.47 to $21.51,  up +2.4% 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 upward by +21,000, but May was revised downward by -27,000, for a net change of -6,000. 

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 was unchanged at 41.8 hours (but May was revised down -0.1 hours.  This is one of the 10 components of the LEI.
  • construction jobs were unchanged.  YoY construction jobs are up +217,000.  
  • manufacturing jobs increased by +14,000, and are down -29,000 YoY
  • temporary jobs - a leading indicator for jobs overall increased by 15,200 (this made a peak in December, and seems to be stabilizing now).

  • the number of people unemployed for 5 weeks or less - a better leading indicator than initial jobless claims - increased by +211,000 from 2,239,000 to 2.418,000.  The post-recession low was set 10 months ago at 2,095,000.

Other important coincident indicators help  us paint a more complete picture of the present:
  • Overtime was unchanged at 3.2 hours.
  • Professional and busines s employment (generally higher- paying jobs) increased by +38,000  and are up +497,000 YoY.

  • the index of aggregate hours worked in the economy rose by 0.2 from  105.2 to 105.4 
  •  the index of aggregate payrolls rose by 0.4  from 128.6 to  129.0. 
Other news included:       
  • the alternate jobs number contained  in the more volatile household survey increased by +67,000  jobs.  This represents an increase  of 2,375,000  jobs YoY vs. 2,164,000 in the establishment survey.   
  • Government jobs rose by +22,000.    
  • the overall employment  to  population ratio for all ages 16 and above fell from  59.7% to 59.6% m/m but is up +0.3% YoY.  
  • The  labor force participation rate rose   0.1%  from 62.6%  to  62.7%  and is now up +.0.1% YoY (remember, this incl udes droves of retiring Bsoomers).  

This month basically took back last month.  Clearly there is some seasonality glitch at work, and the best course is simply to average to the two months.  This gives us a 2 month average of +149,000 jobs added, and -0.05% monthly in the various unemplyment rates.  That is progress, but it is continuing the decelerating progress that we have seen for the last year.

It is mildly encouraging that temporary jobs appear to be stabilizing, but they remain below their peak of 6 months ago.  But it is just as mildly discouraging that manufacturing jobs are stalled, and higher paying professional jobs as well as construction jobs are slowing down strongly.

So, late cycle deceleratioin remains the takewaway.