Friday, August 7, 2020

July jobs report: a very good *relative* gain - perhaps the last

 - by New Deal democrat

  • 1,763,000 million jobs gained. Together with the gains of May and June, this makes up about 42% of the 22.1 million job losses in March and April.
  • U3 unemployment rate declined -0.9% from 11.1% to 10.2%, compared with the January low of 3.5%.
  • U6 underemployment rate declined -1.5% from 18.0% to 16.5%, compared with the January low of 6.9%.
  • Those on temporary layoff decreased -1,300,000 to 9.225 million.
  • Permanent job losers decreased by -6,000 to 2.877 million.
  • May was revised upward by 26,000. June was revised downward by -9,000 respectively, for a net of 17,000 more jobs gained compared with previous reports.
Leading employment indicators of a slowdown or recession

I am still highlighting these because of their leading nature for the economy overall.  These were very positive: 
  • the average manufacturing workweek rose 0.7 hours from 39.0 hours to 39.7 hours. This is one of the 10 components of the LEI and will be a strong positive.
  • Manufacturing jobs rose by 26,000. Manufacturing has still lost 740,000  jobs in the past 5 months, or 5.8% of the total. Since the worst loss was 10.6% of the total, 45% of that loss has been regained.
  • Construction jobs rose by 20,000. Even so, in the past 5 months 444,000 construction jobs have been lost, or 5.8% of the total. Since the worst loss was 15.2% of the total, 59% of that loss has been regained.
  • Residential construction jobs, which are even more leading, rose by 16,300. Even so, in the past 5 months there have still been 26,700 lost jobs, or about 21% of the total.
  • temporary jobs rose by 144,000. Since February, there have still been -557,500 jobs lost, or 21% of all temporary help jobs.
  • the number of people unemployed for 5 weeks or less rose by 344,000 to 3.2 million, compared with April’s total of 14.283 million.
  • Professional and business employment rose by 170,000, which is still 1.648 million, or about 8% below its February peak.

Wages of non-managerial workers
  • Average Hourly Earnings for Production and Nonsupervisory Personnel: fell -$0.11 from $24.74 to $24.63, which is still a gain of over 2.8% in 5 months. This reflects that job losses were primarily among lower wage earners, who have been disproportionately recalled to work.

Aggregate hours and wages:
  • the index of aggregate hours worked for non-managerial workers rose by 1.5%. In the past 5 months combined this has nevertheless fallen by about -9.4%.
  •  the index of aggregate payrolls for non-managerial workers rose by 1.0%. In the past 5 months combined this has nevertheless fallen by about -6.9%.  

Other significant data:
  • Full time jobs were responsible for 591,000 of the gain.
  • Part time jobs were responsible for 803,000 of the gain.
  • The number of job holders who were part time for economic reasons declined by 619,000 to 8.443 million. This is still an increase since February of 4.125 million.

A special note: as expected, there were outsized seasonally adjusted gains in education of 245,000, as layoffs that normally happened in July didn’t, because they happened in earlier months. There were also 27,000 census hires.


Based on some weekly data, it had been feared that there might be a significant decline in jobs this month. Instead, there was another - if smaller - rebound. Even excluding the 301,000 gain in all government jobs, the gain was 1.462 million jobs. Needless to say, this was very positive.

Gains in construction and manufacturing hours were particularly impressive, as were professional and business services. Even with those gains, however, aggregate hours and payrolls are now down from peak about what they were, percentage-wise, at the worst of the Great Recession. 

The distortion in average hourly earnings continues to show that the lower class of workers is still suffering the brunt of the economic consequences of the pandemic, and desperately need continued aid.

While this report was certainly very good in *relative* terms, in absolute terms the  economic devastation has continued. The increase this month was only 10% of the total percentage loss from peak of total employment. In other words, the “V” shaped jobs recovery some were hoping for has stopped materializing. Because initial jobless claims stalled out in 4 of the past 5 weeks, and nonfarm employment tends to lag this trend by a month or two, the outlook for continued job gains next month is very problematic.