November jobs report: good unemployment news, faltering wage growth

- by New Deal democrat

HEADLINES:

• +178,000 jobs added
• U3 unemployment rate down -0.3% from 4.9% to 4.6%
• U6 underemployment rate down -0.2% from 9.5% to 9.3%

Here are the headlines on wages and the chronic heightened underemployment:

Wages and participation rates

• Not in Labor Force, but Want a Job Now: down -36,000 from 5.912 million to 5.876 million  
• Part time for economic reasons: down -220,000 from 5.889 million to 5.669 million
• Employment/population ratio ages 25-54: down -0.1% from 78.2% to 78.1% 
• Average Weekly Earnings for Production and Nonsupervisory Personnel: up $.02 from $21.71 to $21.73,  up +2.4% 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.)

September was revised upward by +17,000, but October was revised downward by -19,000, for a net change of -2,000. 

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

• the average manufacturing workweek declined -0.2 from 40.9 to 40.7 hours.  This is one of the 10 components of the LEI, and is a negative.
 
• construction jobs increased by +19,000 YoY construction jobs are up 155,000.  
 
• manufacturing jobs decreased by -4,000, and are down -54,000 YoY

• temporary jobs increased by +14,300, a new high.


• the number of people unemployed for 5 weeks or less increased by +24,000 from 2,397,000 to 2,421,000.  The post-recession low was set 1 year ago at 2,095,000.

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

• Overtime was unchanged at 3.3 hours.
• Professional and business employment (generally higher- paying jobs) increased by +63,000 and are up +571,000 YoY.


• the index of aggregate hours worked in the economy rose by 0.1  from  106.0 to 106.1 

•  the index of aggregate payrolls was unchanged at 131.3 . 

Other news included:         

• the alternate jobs number contained  in the more volatile household survey increased by  +160,000 jobs.  This represents an increase  of 2,641,000  jobs YoY vs. 2,253,000 in the establishment survey.    
   
• Government jobs rose by +22,000.     

• the overall employment  to  population ratio for all ages 16 and up was unchanged at  59.7%  m/m and is up +0.3% Y oY.   
• The  labor force participation rate fell -0.1% from 62. 8% to 62.7% and is up +0.2% YoY (remember, this includes droves of retiring Bsoomers).     

 SUMMARY 

This was a good headline report with mixed internals. The good news was mainly in the underemployment and underemployment rates, which both fell to new lows, as did the number of those part time for economic reasons. That temporary employment is making new highs is also a good leading indicator for the rest of the jobs market.

The bad news primarily came in faltering wage growth, which fell to +2.4% YoY, and aggregate real wages, which also fell.

Again, a good late cycle "Indian Summer" employment report, but one that if anything amplifies my concern that in the next recession we will see actual wage deflation for the first time in 80 years.