- by New Deal democrat
My current Big Theme is that the AI Boom (or possibly bubble) is counterbalancing a stagnant or even shallowly recessionary rest of the economy.
This was reflected in what has happened in the past few months. The initial jobs report for February was a loss of -92,000 jobs. Then there was a total whipsaw in March, with a gain of 178,000!. After revisions this month the net of both of those months was a paltry +29,000 — right in line with average gains over the past 12 months.
This morning’s report for April had a good headline and mixed internals, but tilted towards the positive - more evidence for the “AI vs. everything else” economy.
Below is my in depth synopsis.
HEADLINES:
- 115,000 jobs gained, Private sector jobs increased 123,000, while government jobs declined -8,000. The three month average declilned from last month’s preliminary +68,000 to +48,000.
- The pattern of downward revisions to previous months continued. February was revised downward by -23,000 to -156,000, while March was revised upward by 7,000 to +185,000, for a net decline of -16,000. As per above, after all the drama the net gain for the two months was only +29,000.
- The alternate, and more volatile measure in the household report, declined by -226,000 jobs. On a YoY basis, this series *declined* for the third month in a row, by 1,276,000 jobs, or an average of -106,000 monthly.
- The U3 unemployment rate remained steady at 4.3%.
- The U6 underemployment rate rose +0.2% to 8.2%.
- Further out on the spectrum, those who are not in the labor force but want a job now rose by +61,000 to 6.111 million, about average for the past 12 months..
Leading employment indicators of a slowdown or recession
These are leading sectors for the economy overall, and help us gauge how much the post-pandemic employment boom is shading towards a downturn. These were mainly positive, although there was one big exception:
- The average manufacturing workweek, one of the 10 components of the Index of Leading Indicators, rose 0.1 hour to 41.6hours, the highest number in 5 years, equalling its 2021 peak of 41.6 hours.
- Manufacturing jobs declined -2,000, the 10th decline in the last 12 months.
- Truck driving rose for a change, by 4,300.
- Construction jobs rose +9,000.
- Residential construction jobs, which are even more leading, declined -1,500, but stayed within the stabilizing trend since last April.
- Goods producing jobs as a whole rose +10,000..
- Temporary jobs, which have declined by over -650,000 since late 2022, rose this month by 7,900, thus remaining above their post-pandemic low set last October.
- The number of people unemployed for 5 weeks or less rose 358,000 to 2.496 million, the highest number in over 5 years except for last November.
Wages of non-managerial workers
- Average Hourly Earnings for Production and Nonsupervisory Personnel increased $.11, or +0.3%, to $32.23, for a YoY gain of +3.7%, a marked increase form its 5 year low of 3.4% set last month. its lowest YoY% gain since the pandemic. This is 0.4% higher than the YoY inflation rate through March. We will have to see what next week’s report for April brings.
Aggregate hours and wages:
- The index of aggregate hours worked for non-managerial workers increased +0.1%, and is up 0.8% YoY, below average for the past two years.
- The index of aggregate payrolls for non-managerial workers rose a strong 0.5%, and is up 4.5% YoY, vs. its post-pandemic low of 4.0% set last June.
Other significant data:
- Professional and business employment rose for the second month in a row, by +7,000. These tend to be well-paying jobs. This remains above its October low, it still remains lower YoY by -35,000, which in the past 80+ years - until now - has almost *always* meant recession.
- The employment population ratio declined another -0.1% to 59.1%, vs. 61.1% in February 2020, and its lowest since October 2021.
- The Labor Force Participation Rate also declined another -0.1% to 61.8% , vs. 63.4% in February 2020, and its lowest since Ocotber 2021.
SUMMARY
This was the second good monthly report in a row, with only one important negative area.
Let’s start with the negatives. The most important of these were all of the unemployment and labor force numbers, excluding the headline unemployment rate, which was unchanged. Employment as measured by the household report went down. Labor force participation and the employment population ratio went down. the underemployment rate increased, as did the number of those who aren’t currently in the labor force but want a job. Additionally, the pattern of net downward revisions to the Establishment survey’s headline jobs number also continued. A few leading sectors, including manufacturing and residential construction employment, declined.
But mainly there were positives, including not just the headline employment number, but the increase in construction, trucking, temporary jobs, and goods producing jobs in toto. The manufacturing workweek returned to its post-pandemic high. Wage growth continued at a decent clip, and aggregate payrolls rose sharply.
Probably most noteworthy, as it relates to AI, is that manufacturing employment has stabilized and even increased slightly in the past 4 months, while as noted above, manufacturing hours equaled their post-pandemic record. We will have to wait for next Tuesday's CPI report to see whether the nominal jump in wage growth was sufficient to equal or overcome the likely second big monthly jump in the inflation rate.
