- by New Deal democrat
For most of this year my Big Theme has been that the AI Boom (or possibly bubble) has been counterbalancing a stagnant or even shallowly recessionary rest of the economy. In the last few months that has moved towards the economy being in an inflationary expansion, including a slight pick-up in employment and downward drift in unemployment.
This month came in at the weak end of that range.
Below is my in depth synopsis.
HEADLINES:
- +29,000 jobs gained. Private sector jobs increased 46,000, while government jobs declined -17,000. The three month average declined to +47,000.
- The pattern of downward revisions to previous months reappeared this month, as July was revised lower by -43,000, and August was also revised lower by -17,000 for a total decline of -60,000.
- The alternate, and more volatile measure in the household report, rose sharply for the second month in a row, by +406,000 jobs. But on a YoY basis, this series which had been negative for six months in a row before last month, turned negative again and is now lower by -504,000..
- The U3 unemployment rate rose +0.1% to 4.2%. This was the result of rounding, as the rate carried one further deimal point rose from 4.14% to 4.17%.
- But the U6 underemployment rate declined another -0.2% to 7.5%, its lowest in over 18 months.
- Further out on the spectrum, those who are not in the labor force but want a job now rose +43,000 to 5.790 million, still close to the bottom end of its recent range.
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 vs. rebounding. These were mainly positive for the third month in a row.
- The average manufacturing workweek, one of the 10 components of the Index of Leading Indicators, rose 0.3% to 42.0 hours, the highest reading of this entire post-pandemic expansion.
- Manufacturing jobs rose +9,000, the 6th increase in the last 12 months.
- Truck driving reversed its recent decline for the third month in a row, increasing by +2,600.
- Construction jobs rose +11,000.
- Residential construction jobs, which are even more leading, rebounded their recent 3 year low, up +3,000.
- Goods producing jobs as a whole rose +18,000.
- Temporary jobs, which had declined by over -650,000 since late 2022, but has reversed higher most of this year, declined by -10,900.
- The number of people unemployed for 5 weeks or less rose +98,000 to 2.098 million, still low compared with the last 3 years.
Wages of non-managerial workers
- Average Hourly Earnings for Production and Nonsupervisory Personnel increased $.07, or +0.2%, to $32.60, for a YoY gain of +3.3%. Except for July’s +3.2%, and several months affected by pandemic shutdowns, this equals the lowest since December 2019. This is slightly less than the 3.4% YoY inflation rate as of August.
Aggregate hours and wages:
- The index of aggregate hours worked for non-managerial workers was unchanged, and is up 0.9% YoY, about average for the past 12 months.
- The index of aggregate payrolls for non-managerial workers rose +0.2%, and is up 4.2% YoY, and up 0.8% above the YoY inflation rate through August.
Other significant data:
- Professional and business employment declined for the first time in six months, down -9,000. These tend to be well-paying jobs. This remains above its low from last October, and remains higher YoY as well.
- The employment population ratio reversed its recent declines, rising another +0.1% to 59.2%, vs. 61.1% in February 2020.
- The Labor Force Participation Rate rose +0.2% to 61.8% , vs. 63.4% in February 2020. IMPORTANT: both the EPOP and LFPR are greatly affected by the retiring Boomer population. In the prime age 25-54 demographic, they are virtually unchanged.
SUMMARY
This was a weakly positive report, consistent with an inflationary expansion, but with reasonably good internals. While the employment gain was weak, and taking into account the revisions to the previous two months was on net negative, and after rounding the unemployment rate rose slightly, the broader measures of employment, most especially including all of the goods producing leading sub-sectors, were positive. And while aggregate hours stalled and aggregate payrolls almost certainly declined adjusting for inflation, they remained higher on a YoY basis. The one more significant negative was that nonsupervisory wages continue to grow at a rate less than recent inflation.
