Friday, December 6, 2019

November jobs report: an excellent report for ordinary working households that takes recession off the table for now

 - by New Deal democrat

  • +266,000 jobs added
  • U3 unemployment rate down -0.1% from 3.6% to 3.5%
  • U6 underemployment rate down -0.1% from 7.0% to 6.9%
Leading employment indicators of a slowdown or recession

I am highlighting these because many leading indicators overall have strongly suggested that an employment slowdown is here. The following more leading numbers in the report tell us about where the economy is likely to be a few months from now. These were positive:
  • the average manufacturing workweek rose 0.1 hour  from 40.4 hours to 40.5 hours. This is one of the 10 components of the LEI and is positive.
  • Manufacturing jobs rose by 54,000 (but would have risen by 13,000 were it not for workers returning from the GM strike). YoY manufacturing is up 76,000, a sharp deceleration from 2018’s pace.
  • construction jobs rose by 1,000. YoY construction jobs are up 146,000, also a deceleration from summer 2018. Residential construction jobs, which are even more leading, rose by 1800.
  • temporary jobs rose by 4800. 
  • the number of people unemployed for 5 weeks or less increased by 52,000 from 1,968,000 to 2,020,000.

Wages and participation rates

Here are the headlines on wages and the broader measures of underemployment:
  • Not in Labor Force, but Want a Job Now: increased by 78,000 from 4.753 million to 4.831 million 
  • Part time for economic reasons: decreased by -16,000 from 4.438 million to 4.322 million 
  • Employment/population ratio ages 25-54: unchanged at 80.3%
  • Average Hourly Earnings for Production and Nonsupervisory Personnel: rose $.07 to $23.84, up +3.7% YoY. Last month was revised higher with a YoY rate of +3.8% a new expansion high. (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.)  

Holding Trump accountable on manufacturing and mining jobs

 Trump specifically campaigned on bringing back manufacturing and mining jobs.  Is he keeping this promise?  
  • Manufacturing jobs rose an average of +6,300/month in the past year vs. the last seven years of Obama's presidency in which an average of +10,300 manufacturing jobs were added each month.   
  • Coal mining jobs increased by 300, an average of 100 jobs/month in the past year vs. the last seven years of Obama's presidency in which an average of -300 jobs were lost each month
September was revised upward by 13,000. October was also revised upward by 28,000, for a net change of 41,000.

Other important coincident indicators help  us paint a more complete picture of the present:
  • Overtime declined -0.1 hour from 3.2  hours to 3.1 hours
  • Professional and business employment (generally higher-paying jobs) rose by 38,000 and  is up +417,000 YoY. 
  • the index of aggregate hours worked for non-managerial workers rose by 0.2%
  •  the index of aggregate payrolls for non-managerial workers rose by 0.5%  
Other news included:            
  • the alternate jobs number contained  in the more volatile household survey rose by 83,000  jobs.  This represents an increase of 1,790 000 jobs YoY vs. 2,204,000 in the establishment survey. 
  • Government jobs rose by 12,000.
  • the overall employment to population ratio for all ages 16 and up was unchanged at 61.0% and is up 0.4% YoY.    
  • The labor force participation rate declined -0.1% from 63.3% to 63.2% and is up 0.3% YoY.


Obviously this was an excellent report, which it has to be said was completely at odds with the manufacturing and consumption data that has been reported in the past month.

There were very few weak spots: short term unemployment rose slightly, as did those not even in the labor force who nonetheless want a job, and overtime.

Everything else was positive to strongly positive. Aside from the headline employment number, the standout was non-supervisory wages, which rose 3.7% in November after a revised 3.8% YoY rate in October, a new expansion high. Almost all of the leading indicators in employment were also positive. In particular temporary jobs, completely contradicting private data, have risen strongly in 3 of the past 4 months. Involuntary part time employment also fell to a new expansion low. Aggregate hours and payrolls also rose strongly. Revisions were positive.

Bottom line: this report completely takes recession out of the picture for the next several months, and was good news for ordinary working households.