Friday, September 4, 2015

August jobs report: Meh headliine, great internals except wage growth still stinks

- by New Deal democrat


  • 173,000 jobs added to the economy
  • U3 unemployment rate fell -0.2% to 5.1% 
With the expansion firmly established, the focus has shifted to wages and the chronic heightened unemployment.  Here's the headlines on those:

Wages and participation rates
  • Not in Labor Force, but Want a Job Now: down -203,000 from 6.135 million to 5.932 million
  • Part time for economic reasons: up  158,000 from 6.325 million to 6.483 million
  • Employment/population ratio ages 25-54: up 0.1 from 77.1% to 77.2% 
  • Average Weekly Earnings for Production and Nonsupervisory Personnel: up +0.2% from $21.02 to $21.07,  up +1.9%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.)
June was revised upward by +14,000.  July was also revised upward by +30,000, for a net change of +44,000.

The more leading numbers in the report tell us about where the economy is likely to be a few months from now. These were very positive.

  • the average manufacturing workweek rose 0.1 hours from 41.7 hours to 41.8 hours.  This is one of the 10 components of the LEI and so will affect it positively.
  • construction jobs 3,000.  YoY construction jobs are up 217,000.  

  • manufacturing jobs decreased by -17,000, and are up 128,000 YoY.
  • Professional and business employment (generally higher-paying jobs) increased by 33,000 and are up  643,000 YoY.

  • temporary jobs - a leading indicator for jobs overall - rose by 10,700.

  • the number of people unemployed for 5 weeks or less - a better leading indicator than initial jobless claims - fell by -393,000 from 2,488,000 to 2,095,000, making a new low for this expansion.

Other important coincident indicators help us paint a more complete picture of the present:

  • Overtime fell -0.1 hour from 3.4 hours to 3.3 hours.

  • the index of aggregate hours worked in the economy rose by 0.4 from a downwardly revised 103.6 to 104.0. 
  • The broad U-6 unemployment rate, that includes discouraged workers declined  -0.1% from 10.4% to 10.3%. 
  •  the index of aggregate payrolls rose by 0.9% from a downwardly revised 123.7 to 124.6.
Other news included:    
  • the alternate jobs number contained in the more volatile household survey increased by  196,000 jobs.  This represents an increase of 2,585,000  million increase in jobs YoY vs. 2,919,000 in the establishment survey.  

  • Government jobs rose by +33,000. 
  • the overall employment to population ratio for all ages 16 and above rose +0.1%  from 59.3% to 59.4%,  and has risen by +0.1% YoY. The labor force participation rate was unchanged at  62.6% and is down -0.3% YoY (remember, this incl udes droves of retiring Boomers). 


Only two things held this report back from being Totally Awesome! The first is the headline 140,000 private jobs created, but as most readers probably already know, August numbers have had a history of major upward revisions.  The second - sigh - once again is wage growth, which despite a 5.1% U3 unemployment rate is unable to crack 2%.  This is terrible and continues to bode ill for the next recession whenver it may come.  I still expect this situation to improve once the broader U6 unemployment rate, which fell again this month, finally falls below 10%.

Everything else was damn near, well, awesome. Not only did both unemployment rates fall to new lows, so did short term unemployment (a leading indicator), and those not in the labor force but want a job now fell to a new post-recession low save for one month.  Involuntary part time workers did go up, but still are at the second-lowest number since the recession. The manufacturing workweek improved Manufacturing and mining employment did fall, but were more than offset by gains elsewhere. Both aggregate hours and payrools also made a new post-recession high.

All in all, a good report.