Friday, May 4, 2018

April jobs report: excellent in almost all respects

- by New Deal democrat

  • +164,000 jobs added
  • U3 unemployment rate fell -0.2% from 4.1% to 3.9%
  • U6 underemployment rate fell -0.2.% from 8.0% to 7.8%
Here are the headlines on wages and the chronic heightened underemployment:

Wages and participation rates
  • Not in Labor Force, but Want a Job Now:  up +19,000 from 5.096 million to 5.115 million   
  • Part time for economic reasons: down -34,000 from 5.019 million to 4.985 million
  • Employment/population ratio ages 25-54:  unchanged at 79.2%
  • Average Weekly Earnings for Production and Nonsupervisory Personnel: rose $.05 from  $22.46 to $22.51, up +2.6% 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.)      
Holding Trump accountable on manufacturing and mining jobs

 Trump specifically campaigned on bringing back manufacturing and mining jobs.  Is he keeping this promise?  
  • Manufacturing jobs up +24,000 for an average of 12,000/month in the past year vs. the last seven years of Obama's presidency in which an average of 10,300 manufacturing jobs were added each month.   
  • Coal mining jobs up +700 for an average of 100/month vs. the last seven years of Obama's presidency in which an average of -300 jobs were lost each month
February was revised downward by -2,000. March was revised upward by +32,000, for a net change of +30,000.   

The more leading numbers in the report tell us about where the economy is likely to be a few months from now. These were positive.
  • the average manufacturing workweek rose +0.2 hours from 40.9 hours to 41.1 hours.  This is one of the 10 components of the LEI.
  • construction jobs increased by +17,000. YoY construction jobs are up +257,000.  
  • temporary jobs increased by +10,300. 
  • the number of people unemployed for 5 weeks or less decreased by -172,000 from 2,287,000 to 2,115,000.  The post-recession low was set over two years ago at 2,095,000.
Other important coincident indicators help  us paint a more complete picture of the present:
  • Overtime rose +0.1 hours from 3.6 hours to 3.7 hours.
  • Professional and business employment (generally higher-paying jobs) rose by +54,000 and  is up +518,000 YoY.

  • the index of aggregate hours worked in the economy rose by 0.5%.
  •  the index of aggregate payrolls rose by 1.1%.     
Other news included:            
  • the  alternate jobs number contained  in the more volatile household survey increased by  +3,000 (!)  jobs.  This represents an increase of 2,020,000 jobs YoY vs. 2,280,000 in the establishment survey.      
  • Government jobs fell by -4,000.       
  • the overall employment to population ratio for all ages 16 and up declined -0.1% to 60.3  m/m  and is up +0.1% YoY.          
  • The labor force participation rate declined -0.1% to 62.8  m/m and is down -0.1% YoY  

All of the good news I expected in last month's employment report (but was probably negated by  the weather) showed up in this month's report. In particular, both the unemployment and underemployment rates declined to new expansion lows. Aggregate hours and payrolls also improved strongly, and hourly wages for nonsupervisory workers tied their expansion high at +2.6% YoY. Involuntary part time employment also fell further, while employment in all significant services and industries rose.

About the only flies in the ointment were the pathetically weak +3,000 improvement in the very volatile household number, the declines in both the employment-population ratio and the labor force participation rate, and the slight decline in YoY payroll growth (consistent with my expectation that this will restart its late cycle slow fade).

But, all in all, an excellent report.