Friday, September 7, 2012

It's Another Mediocre Employment Report

Oh joyous day -- the BLS has provided us with yet another reminder of how tepid the current jobs recovery is.
Total nonfarm payroll employment rose by 96,000 in August, and the unemployment rate edged down to 8.1 percent, the U.S. Bureau of Labor Statistics reported today. Employment increased in food services and drinking places, in professional and technical services, and in health care.
Yes, we're growing, but just barely.  It's certainly not enough to get excited about.

There are some important internal numbers that are concerning:

The average workweek for all employees on private nonfarm payrolls was unchanged at 34.4 hours in August. The manufacturing workweek declined by 0.2 hour to 40.5 hours, and factory overtime was unchanged at 3.2 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls was unchanged at 33.7 hours. (See tables B-2 and B-7.) 
In August, average hourly earnings for all employees on private nonfarm payrolls edged down by 1 cent to $23.52. Over the past 12 months, average hourly earnings rose by 1.7 percent. In August, average hourly earnings of private-sector production and nonsupervisory employees edged down by 1 cent to $19.75. (See tables B-3 and B-8.)
The change in total nonfarm payroll employment for June was revised from +64,000 to +45,000, and the change for July was revised from +163,000 to +141,000.
The workweek was unchanged and down -- indicating that there is still excess capacity that we're not using.  That's not good.

Hourly earnings edged down -- another bad sign.

And we see a net reduction in jobs created over the last two months.

At this point, these reports are nothing more than cruel jokes on the economic pundits.
NDD here, seconding everything Bonddad said above, with a few additional comments:

In addition to the leading indicator of the manufacturing workweek shrinking, manufacturing jobs also declined 16,000, some but not all of which was due to auto manufacturers laying off fewer workers in July and so recalling fewer in August. Temporary jobs declined 4900.

Another leading indicator, the number of people unemployed from zero to 5 weeks, increased by 133,000.  It is 301,000 over its level in April.  This is a level that in the past has frequently been associated with the onset of recession.

The diffusion index of employment growth declined to 50.2%, indicating that as many industries are shedding workers as are adding them.

The household survey reported an actual loss of -119,000 jobs.

Private jobs created were +103,000.  Government shed -7000 jobs.

There were really only two bright spots.  Aggregate hours worked increased 0.1% to 96.0 (2007=100).
Unemployment declined to 8.1%, and the broader U-6 unemployment rate declined to 14.7%.  Even this isn't as good as it first sounds, as the decline was because 368,000 people left the labor force (recall that there is a heated debate as to how much of this is people giving up vs. Boomers retiring).  Both the participation rate and the employment to population ratio remained punk.

This is the kind of report that I would expect to see a few months before the onset of recession.  That June and July were both revised down is another trend I would expect to see on the cusp of a recession.  That hiring was so abysmal even in the relative absence of firing as measured by initial jobless claims is yet another red flag.

I'd probably go a little further than Bonddad and call this not just mediocre, but miserable - as miserable as a report could be and still have a positive topline number.