- by New Deal democrat
My focus remains on whether jobs growth continues to decelerate, and whether the leading indicators, particularly manufacturing and construction jobs, as well as the unemployment rate (which leads going into recessions) have meaningfully deteriorated.
In May the headlines on employment were decent if slightly weak, but hid much more weakness, while unemployment improved, but not for the best of reasons.
Here’s my in depth synopsis.
HEADLINES:
- 209,000 jobs added, the weakest monthly number since December 2020.
- Private sector jobs increased only 149,000. Even worse, Education and health hiring was 73,000 of that total (UPDATE: 65,200 in health, 7,200 in education. An earlier version erroneously indicated all education); all remaining private categories added only 76,000. Government jobs increased by 60,000.
- April was revised lower by -77,000 and May by -33,000, for a total of -110,000. The three month moving average decreased to 244,000.
- The alternate, and more volatile measure in the household report rose by 273,000 jobs. The YoY% gain in this report is +1.9%, an increase from May but near its lowest rate since 2020.
- The U3 unemployment rate declined -0.1% to 3.6% (still above the 3.4% low last year). The civilian labor force, the denominator in the figure, rose slightly (by 183,00), while the numerator, the number of unemployed, declined by -140,000.
- U6 underemployment rate rose 0.2% to 6.9%
- Further out on the spectrum, those who are not in the labor force but want a job now declilned -88,000 to 5.389 million, still well above its post-pandemic low..
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. These were mainly positive:
- the average manufacturing workweek, one of the 10 components of the Index of Leading Indicators, was unchanged at 40.7, still down -0.9 hours from February peak last year of 41.6 hours.
- Manufacturing jobs increased by 7,000.
- Construction jobs increased by 23,000.
- Residential construction jobs, which are even more leading, rose by 800. It nevertheless appears likely that January was the peak for this sector.
- Goods jobs as a whole rose 29,000. These should decline before any recession occurs.
- Temporary jobs, which have generally been declining late last year, declined sharply, by -12,600.
- the number of people unemployed for 5 weeks or less declined -15,000 to 2,068,000.
Wages of non-managerial workers
- Average Hourly Earnings for Production and Nonsupervisory Personnel increased $.13, or +0.3%, to $28.75, a YoY gain of 4.7%, the lowest YoY gain since June of 2021.
Aggregate hours and wages:
- the index of aggregate hours worked for non-managerial workers increased 0.2%.
- the index of aggregate payrolls for non-managerial workers rose 0.5%, and increased 6.2% YoY, the lowest rate since March 2021, but significantly above the inflation rate, meaning average working class families have more buying power.
Other significant data:
- Leisure and hospitality jobs, which were the most hard-hit during the pandemic, rose only 21,000, -328,000, or -2.0% below their pre-pandemic peak.
- Within the leisure and hospitality sector, food and drink establishments, declined for the first time since 2020, down -800 jobs, and remain-52,100, or -0.4% below their pre-pandemic peak.
- Professional and business employment rose only 21,000. This series has also been decelerating and is now up 2.1% YoY.
- The Labor Force Participation Rate was unchanged at 62.6%, vs. 63.4% in February 2020.
- The number of job holders who were part time for economic reasons rose a sharp 452,000.
SUMMARY
The headline for this report would be the typical “deceleration continues, but objectively strong” if it were not for the anemic private jobs growth. Only 76,000 private jobs were added, ex-education and health. Professional and business job growth declined to its lowest level in 3 years except for 2 months. Restaurant and bar employment actually declined, ending its strong comeback.
Further, while the unemployment rate declined slightly, this was in part due to a lackluster increase in the civilian labor force. And the underemployment rate increased to its highest level in almost a year, due in large part to a sharp increase in involuntary part time employment.
On the plus side, the leading sectors of manufacturing, construction, and employment in the goods producing sector as a whole all increased. I do not think there is going to be a recession until this sector definitively rolls over.
