June 6, 2014

May 2014 Employment Situation Summary (060614): 217K Jobs Added, Unemployment Rate Stays at 6.3%

Filed under: Economy,Taxes & Government — Tom @ 8:08 am

Econ catchup:

Predictions:

  • Bloomberg — 215,000 seasonally adjusted jobs added, unemployment rate increases to 6.4%.
  • Business Insider — same as Bloomberg.
  • Associated Press — 220,000 jobs added, unemployment rate increases to 6.4%.

Business Insider notes that the U.S. is “113,000 jobs away from the total employment peak that was reached in early 2008.” That’s six years and five months, if it indeed happens.

Read more: http://www.businessinsider.com/post-recovery-milestone-2014-6#ixzz33rLFXFds

Benchmarking the Not Seasonally Adjusted Data:

Longtime readers know that yours truly goes to the raw data to get a grip on where the labor market is really going. So let’s do that:

NSAandSAjobs2001ThruApril2014rev

May is the fourth month in a five-month series of historically high job adds. Big positive number in these months are important. On that basis, February was weak, March was somewhat better, and April was almost as strong as it needed to be. So that would appear to imply momentum.

In benchmarking May, it’s important to note that the overall 2010 number inluding Census Bureau part-timers.

With that in mind, for the job market to be genuinely healing, the economy needs to have actually added 985,000 jobs in May, with the 975,000 added in the private sector.

I suspect that this may be the month during which the economy finally meets the advance raw job additions benchmarks yours truly has set.

We’ll see here at 8:30 a.m.

HERE IT IS (full HTML permanent link): At the seasonally adjusted level, the topside numbers are in line with expectations —

Total nonfarm payroll employment rose by 217,000 in May, and the unemployment rate was unchanged at 6.3 percent, the U.S. Bureau of Labor Statistics reported today. Employment increased in professional and business services, health care and social assistance, food services and drinking places, and transportation and warehousing.

Household Survey Data

The unemployment rate held at 6.3 percent in May, following a decline of 0.4 percentage point in April. The number of unemployed persons was unchanged in May at 9.8 million. Over the year, the unemployment rate and the number of unemployed persons declined by 1.2 percentage points and 1.9 million, respectively.

… The civilian labor force participation rate was unchanged in May, at 62.8 percent. The participation rate has shown no clear trend since this past October but is down by 0.6 percentage point over the year. The employment-population ratio, at 58.9 percent, was also unchanged in May and has changed little over the year.

Establishment Survey Data

Total nonfarm payroll employment increased by 217,000 in May, with gains in professional and business services, health care and social assistance, food services and drinking places, and transportation and warehousing. Over the prior 12 months, nonfarm payroll employment growth had averaged 197,000 per month.

Professional and business services added 55,000 jobs in May, the same as its average monthly job gain over the prior 12 months. In May, the industry added 7,000 jobs each in computer systems design and related services and in management and technical consulting. Employment in temporary help services continued to trend up (+14,000) and has grown by 224,000 over the past year.

In May, health care and social assistance added 55,000 jobs. The health care industry added 34,000 jobs over the month, twice its average monthly gain for the prior 12 months.

After revision, the change in total nonfarm employment for March remained +203,000, and the change for April was revised from +288,000 to +282,000. With these revisions, employment gains in March and April were 6,000 lower than previously reported.

Not seasonally adjusted results:

Overall job adds came in at 920,000, 65K short of the 985K benchmark; the private sector adds were 959,000, only 16K short of the 975K benchmark. These converted to +217K overall and 216K in the private sector. This is probably as close as the private-sector number has come to the benchmark in the five or so years I’ve been doing advance benchmarking.

One could probably make a decent argument that Team Obama got hurt in the seasonal adjustment conversion by 30K or more than expected, both overall and in the private sector.

Other notes (referencing seasonally adjusted data unless otherwise indicated):

  • The unemployment rate stayed the same because the workforce increased by less than 200,000. Well, at least it’s not stagnant. But it also means that the job-market situation isn’t yet strong enough to pull discouraged workers and others on the sidelines from jumping back in. Update: Also note that it’s a very unimpressive bounceback after considering April’s labor force decline of 806,000.
  • The participation rate may have stayed the same overall, but for 20-and-over white men it dropped to 72.2%. I’m betting that’s a multi-decade low … actually, except for Oct. 2013 (72.1%), it’s an all-time low in the 60 years the stat has been tracked.
  • Full-time employment has been picking up a bit, but the total of full-timer workers is still a shocking 3.148 million below where it was at its peak in November 2007 (118.727 million vs. 121.875 million).
  • April’s temporary help services job adds were revised down into the teens from the mid-20s.
  • This is a hunch, but it may be that the big “health care” number (55K jobs added, 84K in the past two months) may relate to the imposition of Obamaare-related busywork and paperwork.
  • Another 31,700 jobs were added in food and drinking establishments. While the overall economy has just returned to its pre-recession peak employment level, this particular category is a whopping 9.8 percent above its pre-recession peak (10.621 million vs. 9.673 million).

Reaction/reports from elsewhere:

  • Zero Hedge“What Quality Jobs? Over Half Of May Payroll Growth Is In Education, Leisure And Temp Help Jobs”
  • Bloomberg auditions for Saturday Night Live — “the economy gained traction.”
  • Bloomberg also teases the White House claiming the economy is “gathering steam.”
  • Chris Rugaber at AP is a little more measured“… fueling hopes that the economy will accelerate after a grim start to the year.”

Final point:

For all the press celebration of a return to the pre-recession peak of payroll (i.e., Establishment Survey) jobs (138.463 million vs. 138.365 million in January 2008, i.e., 76 long months ago), the fact remains that the more comprehensive Household Survey shows total employment 781,000 jobs shy of its pre-recession peak (145.814 million vs. 146.595 million in November 2007).

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1 Comment

  1. Regarding the final point, the seasoning seems a bit off as you noted earlier. While the 145.814M seasoned employed is off May 2007′s/2008′s 145.903M/145.908M, the unseasoned 146.398M employed is much better than May 2007′s/2008′s 145.864M/145.927M.

    On an unseasoned basis, this is the first month that the number of employed is greater than the same month in both 2007 and 2008.

    In fact, the calculated employed seasonal factor of 100.40 is the highest for a May since 1964. It also compares unfavorably to 2003′s 100.02, with 2003 being the previous year with May 31 falling on a Saturday.

    Comment by steveegg — June 6, 2014 @ 11:52 am

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