JOBS | Average Increase Nov-Jan, 192,000

Nonfarm Payroll (BLS)

Total nonfarm payroll employment rose by 200,000 in January. However, the net increase in total nonfarm payroll employment was revised down for November-December:

• The November increase was revised down from 252,000 to 216,000.
• The December increase was revised up from 148,000 to 160,000.
• The net change was that gains in payroll jobs in November and December combined were 24,000 fewer than previously reported.
• After revisions, job gains averaged 192,000 per month over the last 3 months. A moving average is more reliable for payroll job changes. Each month, prior data is revised based on additional reports and recalculation of seasonal factors. Noise in the reported numbers is especially likely during the annual BLS benchmark process at the end of each  year.

Employment continued to trend up in construction, food services and drinking places, health care, and manufacturing:.

• Construction added 36,000 jobs in January, with most of the increase occurring among specialty trade contractors (+26,000). Employment in residential building construction continued to trend up over the month (+5,000). Over the year, construction employment has increased by 226,000.

• Food services and drinking places employment continued to trend up in January (+31,000). The industry has added 255,000 jobs over the past 12 months.

• Health care continued its long and steady record of adding jobs in January (+21,000), with a gain of 13,000 in hospitals. In 2017, health care added an average of 24,000 jobs per month.

• Manufacturing continued to add jobs (+15,000). Durable goods industries added 18,000 jobs. Manufacturing has added 186,000 jobs over the past 12 months.

• Other major industries were little changed, including mining, wholesale trade, retail trade, transportation and warehousing, information, financial activities, professional and business services, and government.

The average workweek for all employees on private nonfarm payrolls declined by 0.2 hour to 34.3 hours in January. In manufacturing, the workweek declined by 0.2 hour to 40.6 hours, while overtime remained at 3.5 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls edged down by 0.1 hour to 33.6 hours.

In January, average hourly earnings for all employees on private nonfarm payrolls rose by 9 cents to $26.74, following an 11-cent gain in December. Over the year, average hourly earnings have risen by 75 cents, or 2.9 percent. Average hourly earnings of private-sector production and nonsupervisory employees increased by 3 cents to $22.34 in January.

The January unemployment rate was 4.1 percent for the fourth consecutive month. The number of unemployed persons was 6.7 million, changed little over the month. Full data are at www.bls.gov. Among major worker groups, the unemployment rate for Blacks increased to 7.7 percent in January, and the rate for Whites declined to 3.5 percent.

In January, 1.7 million persons were marginally attached to the labor force, little changed from a year earlier. (The data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey.

Among the marginally attached, there were 451,000 discouraged workers in January, little changed from a year earlier. (The data are not seasonally adjusted.) Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. The remaining 1.2 million persons marginally attached to the labor force in January had not searched for work for reasons such as school attendance or family responsibilities.

BLS | "Phony Numbers" on Their Way?

"Phony Numbers" Yesterday? Tomorrow? 

Jan. 23, 2017–The Trump Team attacked the BLS in 2016 for issuing misleadingly favorable numbers on unemployment. Trump called them "phony numbers".

In the second-last paragraph of his Op-Ed today, Paul Krugman wonders whether the Trump White House will be leaning on the BLS to do exactly what they were accused of under Obama.

The payroll job numbers are fairly hard to manipulate. They are based on filings by employers for unemployment insurance. If states with Republican governors wanted to influence the numbers they might be able to do this for a single month–for example by changing deadlines or filing procedures. But it is hard to see how they could do this easily over several months or years.

Meanwhile, blue-state governors–and some red-state governors–would be on the lookout for misuse of their data. Economists and statisticians are often alert when numbers that don't make sense and in the tradition of whistle-blowers they sometimes they speak up regardless of the consequences.

The household employment numbers are based on a sample of households surveyed by the Census Bureau, which reports to the Secretary of Commerce. When I was actively working with the numbers the Census work was paid for by a contract with the Commissioner of Labor Statistics, who reports to the Secretary of Labor; I have not heard of any change in this procedure.

One has to have faith that any secret changes in collecting these numbers, which have long been subject to scrutiny, would be difficult because someone would soon speak out in private or public.

JOBS | U.S. Boom Amidst Global Gloom

U.S. Job Growth Higher in December,
Unemployment still 5%. But will weak
 demand from overseas be exacerbated
 by a stronger dollar?

The just-released BLS jobs report for December [link is to the BLS News Release] shows payrolls rose by 292,000 in December. The good news will be much appreciated as Asia and Europe suffer from slack demand and pessimism.

Upward revisions for October and November reinforced the labor market strength in December, producing an average growth of 284,000 over the last three months, up from an average of 221,000 per month for the full year 2015.

Economists Underestimated December Growth. A Reuters survey of economists released an hour before the BLS data showed an average expected growth figure of approximately 200,000 new jobs.

With the upward revisions in the prior two months, that number was way off. Reuters should probably stop publishing predictions that will be contradicted within an hour. (How useful are they, really? To users and to those involved in the exercise?)

The U.S. "Misery Index" Is a Tiny 5.4 percent. We should be so happy. The unemployment rate in December was 5.0 percent for the third month in a row as inflation remains low– the November Consumer Price Index for all Urban Consumers (CPI-U) rose only 0.4 percentage point, seasonally adjusted, compared with November 2014.

Industry Detail. Professional and business services added 73,000 jobs in December, with nearly half the gain from growth in temporary help services, which rose 34,000. In 2015, employment in professional and business services increased by an average of 50,000 per month, not much below the 59,000-a-month figure in the strong year 2014.

Construction showed strong job growth for the third consecutive month. Health care also continued to add jobs in December and showed an even stronger year in 2015 than the year before. Employment in food services and drinking places increased by 37,000 in December, another bright spot.

Motion picture and sound recording industries added 15,000 jobs in December, offsetting a decline
in the previous month. Employment rose among couriers and messengers. Other sectors changed little.

Labor Market. Among people who were neither working nor looking for work in December, 1.8 million were classified as marginally attached to the labor force, down from 2.3 million a year earlier. The number of discouraged workers, a subset of the "marginally attached" who believed that no jobs were available for them, was 663,000 in December, little different from a year earlier.

The labor force participation rate, at 62.6 percent, has shown little change in recent months. The employment-population ratio, at 59.5 percent, has also changed little. The BLS has published a little noted article in December by Steven F. Hipple on the drop in the U.S. labor force participation rate since 2000. BLS counts people who are neither working nor looking for work as “not in the labor force.”  From 2004 to 2014, the percentage of such people has increased, reducing the labor force participation rate. Data from the Current Population Survey (CPS) and its Annual Social and Economic Supplement (ASEC) provide some insight into why people are not in the labor force. In the ASEC, people who did not work at all in the previous year are asked to give the main reason they did not work.

Interviewers categorize survey participants’ verbatim responses into the following six categories:

• ill health or disabled; 
• retired; 
• home responsibilities; 
• going to school;
• could not find work; and 
• other reasons. 

A quick summary of Hipple's article is: Between 2004 and 2014, all of these factors came into play, and a single factor goes a long way toward explaining what is happening–the aging of the work force. More workers are becoming disabled or retiring, at the same time as workers withdrawing from the labor force continue to cite the other reasons.

FOMC | Job Numbers Mean EZ Decision (Comment)

The Effective Fed Funds Rate. Source: FRED, St. Louis Fed. Since Dec. 2008
 the target rate has been between 0 percent and 0.25 percent, i.e., at the
"zero bound"; rate will likely be raised at the next FOMC meeting.

The job numbers from the BLS this morning show total nonfarm payroll employment increased by 211,000 in November.

The unemployment rate was unchanged at 5.0 percent.

Job gains occurred in construction, professional and technical services, and health care. Mining and information lost jobs.

The numbers have been widely anticipated because they are the last before the Ides of December FOMC meeting.

Fed Chair Janet Yellen made clear yesterday in her testimony before the Joint Economic Committee of the Congress that the Fed is ready to raise the zero-bound Federal Funds rate that has been at the zero-bound level since December 2008. The only major concern is lackluster economies in the rest of the world.

Comment

The Fed has a dual mandate (besides the basic one of ensuring stability in financial markets) – its traditional 1913 mandate to preserve the value of the dollar by reining in lending during periods of speculation and therefore inflation, plus its 1946 mandate to ensure full employment.

Interest-rate doves like Paul Krugman and Brad DeLong argue that since the United States has no inflationary pressure, interest rates should not be raised. If inflation is below the 2 percent Fed inflation target, leave rates alone. While unemployment is low, the employment/population ratio is also low and economic growth has been slow.  Why is anyone is thinking of raising interest rates? They are afraid raising rates will kill the economy.

One answer is that the zero-bound rate is an unnatural one, giving no flexibility on the stimulus side. The Fed wants to be able to respond to economic developments in either direction. So long as it is at the zero bound, it is powerless to do much to stimulate demand, notwithstanding the QE initiatives.

FOMC | Jobs Soar, Rate Hike Likely, But *100%*?

Payroll jobs in October exceed prior
months and forecasts.

The BLS reported this morning that nonfarm payrolls rose 271,000 in October, with a slight drop in unemployment to 5 percent.

The payroll-job increase was well above the 185,000 increase forecast by economists who do that kind of thing (a foolhardy activity, since a forecast on Thursday will definitely be proven wrong on Friday).

Caution: There will be another jobs report in early December before the FOMC meets in mid-December. But Bill Gross says there is a "100% chance" that the FOMC raises rates in December, regardless of the December jobs report.

The October increase is exceeds the 137,000 increase in September and a similar number in August, and paves the way for a December increase in the federal funds rate, which would be the first such move since the zero-bound level set in December 2008.

The Fed Funds rate has been at the zero bound for 7 years.

In January 2009 I posted a comment on the December 16, 2008 decision by the FOMC after hearing from Laurence Meyer, former Vice Chairman of the Fed.

Meyer recommended that the Fed take a long vacation, but I am pretty sure he didn't mean a vacation that would last this long.

The average monthly job growth for the three months August-October is about 150,000, well below the 210,000 per month first-half-2015 average.

The potential for a rate rise has pumped up the dollar to one-month high against the British pound and a three-month high against the euro.

Here are links to the BLS data:

Payroll employment rises by 271,000 in October; jobless rate essentially unchanged (5.0%)

Total nonfarm payroll employment increased by 271,000 in October, and the unemployment rate was essentially unchanged at 5.0 percent. Job gains occurred in professional and business services, health care, retail trade, food services and drinking places, and construction.

HTML | PDF | RSS | Commissioner's Statement.

Job Numbers Better, But Mind What's Going on Backstage

Behind the Numbers Unveiled Today.

Ta-da. The curtain rose this morning on job numbers, +233,000 in April on U.S. nonfarm payrolls from March, seasonally adjusted.

Better.

But watch out for the backstage revisions. The change in total nonfarm payroll employment for February could be described as "essentially unchanged", shading up slightly to +266,000 from +264,000.

However, the change for March was lowered by nearly one-third, to +85,000 jobs from +126,000 jobs.

Without the March downward revision, the +233,000 jobs in April would have shed +41,000 of its growth and would be only +192,000. http://www.bls.gov/news.release/empsit.nr0.htm

This is well below last year's average of +260,000 per month.

The details of the payroll-job numbers repay study for industry trends. The construction industry, even seasonally adjusted, showed strength in April at a healthy pace, growing by 45,000 jobs. But the growth is primarily in specialty contract jobs. Another barrier for workers without the specialty skills.

Mining support firms, oil and gas drillers, showed declines for the fourth month, suggesting a cooling of the fracking frenzy. The mining industry has lost 49,000 jobs since the beginning of the year, mostly in support functions.

Professional and business services employment rose 62,000 in April. The tech sector continues to show strength, the fifth Kondratiev wave that is showing more capacity to grow than 20th century forecasters predicted. In April, employment continued to trend up in computer systems design and related services (+9,000), in business support services (+7,000), and in management and technical consulting services (+6,000). http://www.bls.gov/news.release/empsit.t17.htm

The BLS describes the decline in the unemployment rate "essentially unchanged", but it's on the good side of that, falling to 5.4 percent from 5.5 percent in March, which is the lowest it's been since May 2008, before the Lehman meltdown in September of that year. http://www.bls.gov/news.release/empsit.nr0.htm

JOBS | Strong Growth, Jobless Rate Falls to 5.9% (Comment)

Jobs Grow Faster in September,
Unemployment Below 6%

Summary. The BLS jobs report for September [link is to the archived BLS News Release] supports the growing consensus that the economy is breaking out of its slow-growth mode. The payroll jobs increase is a healthy 248,000 - and would be 317,000 if we added in the BLS's upward revisions in the July and August job numbers. Unemployment fell to 5.9 percent, falling for the first month since 2009 below 6 percent.

The September numbers and retroactive revisions bring the BLS reports more in line with economic forecasts of faster recovery for the August payroll jobs and unemployment rates.

Payroll Jobs. Nonfarm payroll jobs grew by 248,000 in September, with notable increases in retail trade, health care service, and professional and business services. This is well above the 213,000 per month average gain over the previous 12 months. The September increase is after combined upward revisions of the July and August numbers by 69,000 jobs, so the picture has improved by 317,000 jobs since June.

The good news extends to individual sectors such as professional and business services, which added 81,000 jobs in September, well above the 56,000-per-month average gain in the previous 12 months. The professional-services gains were concentrated among temp and other employment services, management consulting, and architectural and engineering firms - but law-firm jobs fell by 5,000.

These increases were on top of upward revisions in job numbers for July (by 31,000 jobs) and August (by 38,000 jobs).

Unemployment.  The September unemployment rate declined by 0.2 of a percentage point to 5.9
percent, the first time it fell below 6 percent since 2009, in mid-recession. The drop in the unemployment rate resulted from a decrease in the number of unemployed persons by 329,000 to 9.3 million. The September unemployment rate was 1.3 percentage points below the number in September 2013. The number of unemployed persons fell by 1.9 million.

September unemployment rates declined from August, seasonally adjusted, for

• adult men, 5.3 percent
• whites, 5.1 percent
• Hispanics, 6.9 percent. 

The rates changed little, seasonally adjusted, for

• adult women, 5.5 percent
• teenagers, 20.0 percent
• blacks, 11.0 percent

The rate for Asians was 4.3 percent, not seasonally adjusted, little changed from a year earlier.

In September the number of discouraged workers fell to 698,000, a decline of 154,000 from a year earlier.

White House Blog on Job Numbers, Jason Furman . Data on August economy in New York City and the NYC Metro Area.

Comment

Saturday, Oct. 4 - The New York Times this morning, with two reporters'  names at the top and two more at the end of the story, notes the higher jobs and lower unemployment, and, looking for a new angle, adds in the headline: "Sunny News May Not Bolster Democrats."

GOP-leaning John Crudele at the NY Post, by contrast, argued that the good numbers will help Democratic candidates "because issue No. 1 with Americans is the economy. In addition to the unexpectedly strong job growth, the unemployment rate broke through the 6 handle."

Let's look at the NY Times case for their sceptical take on the good news. It is stated in para. 2 and is supported starting in para. 11.

Paragraph

• 1. The economic news is good.
• 2. But the news "appeared to be too little, too late to bolster the prospects of Democratic candidates facing voters".
• 3. Weak support for the statement in para. 2.
• 4-10. More good news, not supporting para. 2.  at all.
• 11. "[V]oters' opinions on the economy tend to lag considerably behind the actual numbers. [The new data] could help lift President Obama's party [but not until] in 2016." Doesn't that depend on how well Democratic candidates get out the word? Surely it doesn't take two years for data on jobs to percolate down to voters in the age of social media (see paras. 18-19).
• 12(a). "The employment rate ... of women, young people and black voters - did not improve in September." The actual BLS language is that it "changed little" in September. The tables accompanying the story show that unemployment among teenagers was down by 1.3 percentage points from September 2013 but rose 0.4 percent from August. But among blacks the rate was down by two full percentage points below September 2013 and was down 0.4 of a percentage point below August 2014 - still high, but both numbers are improving.
• 12(b). "Nor did the numbers of people employed part time because they could not find full-time work." The number shown in the Times table is 7.1 million people in this status, down 2.4 percent from August and down 10.2 percent from September 2013. Both numbers are improving.
• 13. "The actual percentage of working-age people with jobs - 59 percent - has not changed for four months ... the lowest level since 1978." This number doesn't change much, relative to the unemployment rate, by its nature. The unemployment rate is based on a monthly telephone poll of a relatively small percentage of households. The employment to population ratio is an aggregate number divided by a population estimate. A major reason it increased after 1978 is women were entering, and staying in, the work force in much greater numbers. Maybe we are seeing a long-term shift in how and where people work, and their preference for leisure and spending time at home - not just discouraged workers.
• 14-15. Rep. Kevin Brady (R-TX), Chairman of the Joint Economic Committee, says Obama has held back recovery.
• 16. "Hourly earnings are stuck in the mud, down slightly in September." But the table immediately adjacent shows hourly earnings grew 0.2 percent in September over August and 2.2 percent over September 2013.
• 17. "Economists said the slow pace of wage gains despite the sharp drop in the unemployment rate was a continuing puzzle..." Unemployment may just not be low enough to drive higher wages, and other factors are at work. But the Phillips Curve, the tradeoff between unemployment and inflation documented decades ago by LSE Professor A. W. Phillips, still lingers in the thinking of central bankers everywhere because no one has found a better core model.
• 18-19. Pollster Peter Hart says that despite the speed of communication made possible by social media, opinions still take along time to change. "What you're telling me is the water in my basement has dropped a third, but what I'm telling you, I've got water in my basement." However, an unemployment rate below 6 percent is not water in the basement. Historically, the 6 percent unemployment rate was the level below which inflationary pressures were supposed to start.
• 20. Polling by Hart and Republican William McInturff showed in August that four out of 10 Americans say they have been directly harmed by the recession starting in 2008. Independents were much more likely (51 percent) to report that a member of their household lost a job than Democrats or Republicans (38 or 39 percent).
• 21-26. More good news relating to the economy, and statements from Democrats that their economic policies are working.
• 27. Concern about 4.8 million workers "missing from the job force". See my comment in para. 13.
• 28-32. The rest of the story raises the question of the impact of the good job numbers on Fed interest-rate policy. The Fed did not expect 5.9 percent unemployment before the end of 2014, at the earliest. The President of the traditionally hawkish St. Louis Fed, James B. Bullard,  is quoted as saying that the Fed ought to start raising interest rates before mid-2015.  However, the consensus is that Janet Yellen's Fed is cautious about over-reacting to good economic news.

I have followed up on this post after a comment from MercatorNet, here: http://cityeconomist.blogspot.com/2014/10/demography-destiny-and-employment.html.

JOBS | Disappointing in August

No breakout in job creation.

Nonfarm payroll jobs increased by 142K in August, a break in a six-month series of 200K+ job increases, the BLS has just reported.

The predictions were for a 220-230K increase.

Both the August unemployment rate of 6.1 percent and the number of unemployed persons, 9.6 million, were little changed from July.

Some commentators were hoping for a 6.0 percent unemployment rate, or even sub-6.0 percent.

However, to look at the bright or hopeful side:

• The August unemployment rate was down by 1.1 percentage points from August 2013.
• The number of unemployed persons was reduced by 1.7 million from August 2013.
• As I said earlier this week, the post-Labor Day employment figures will reflect the back-to-work scene better, as well as the net effect of educational hiring.
• The Fed meanwhile gets no encouragement to hike interest rates quickly.
• Eyes will be on the next release on October 3.

Comment

October 3 - The September job numbers - more reliable than August because the dust settles in the educational arena - were revised upward for both July and August, narrowing the gap between the predictions and the BLS-reported numbers. The BLS report for September also showed the unemployment rate down to 5.9 percent, in line with some predictions for the August numbers. The BLS seems to be catching up to the forecasters.  

JOBS | March Metros Index–93.8 and 73.1, Slower Growth

Metro Jobs in March showed a diffusion index of 93.8 for unemployment and 73.1 for payroll jobs. The BLS reported the numbers today:

Unemployment rates were lower in March than a year earlier in 342 of the 372 metropolitan areas, higher in 16 areas, and unchanged in 14 areas.... [Also,] 267 metropolitan areas reported over-the-year increases in nonfarm payroll employment, 96 reported decreases, and 9 had no change. The national unemployment rate in March was 8.4 percent, not seasonally adjusted, down from 9.2 percent a year earlier.

The trouble with this method of reporting is that the monthly data come in clusters of three. A diffusion index provides a single number showing how metros have done. Using the same weights as the Conference Board, the numbers that get better get a 1 and the numbers that get worse get a zero; the number of unchanged metros get a 0.5. That makes for an unemployment diffusion index of (342+7)/372 = 93.8 percent of metros showed a favorable direction.

But the corresponding index for nonfarm payroll jobs would be (267+4.5)/372 = 73.0 percent. In other words, in 73.0 percent of metros, payroll jobs showed a favorable direction (they grew). This doesn't sound so encouraging. Job growth is too slow.  

It makes a difference how the numbers are presented. If a single number fairly reports multiple numbers without much loss of information from the aggregation, the public is better off. Better public understanding of the data makes for better policies.