June 3, 2016

May Employment Situation Summary (060316): Unemployment Rate Drops to 4.7 Percent; Only 38K Jobs Added (Net Job LOSS With Revisions); Only Positive Because of Seasonal Conversion Cooking; Workforce Participation Drops

Filed under: Economy,Taxes & Government — Tom @ 8:29 am

Predictions:

Thing to watch for — what happens to the participation rates.

Not seasonally adjusted benchmarks — will have to wait until after the report’s release for after-the-fact evaluation.

The report will be here at 8:30.

HERE IT IS (permanent link to full report) Looks like malaise on steroids, if there can be such a thing, but further evaluation is forthcoming —

The unemployment rate declined by 0.3 percentage point to 4.7 percent in May, and nonfarm payroll employment changed little (+38,000), the U.S. Bureau of Labor Statistics reported today. Employment increased in health care. Mining continued to lose jobs, and employment in information decreased due to a strike.

Household Survey Data

In May, the unemployment rate declined by 0.3 percentage point to 4.7 percent, and the number of unemployed persons declined by 484,000 to 7.4 million. Both measures had shown little movement from August to April.

Among the major worker groups, the unemployment rates for adult men (4.3 percent), adult women (4.2 percent), Whites (4.1 percent), and Hispanics (5.6 percent) declined in May. The rates for teenagers (16.0 percent), Blacks (8.2 percent), and Asians (4.1 percent) showed little or no change.

The number of long-term unemployed (those jobless for 27 weeks or more) declined by 178,000 to 1.9 million in May. These individuals accounted for 25.1 percent of the unemployed. The number of persons unemployed less than 5 weeks decreased by 338,000 to 2.2 million.

The number of job losers and persons who completed temporary jobs declined by 282,000 over the month to 3.6 million.

In May, the civilian labor force participation rate decreased by 0.2 percentage point to 62.6 percent. The rate has declined by 0.4 percentage point over the past 2 months, offsetting gains in the first quarter. The employment-population ratio, at 59.7 percent, was unchanged in May.

… Establishment Survey Data

Total nonfarm payroll employment changed little in May (+38,000). Job growth occurred in health care. Mining continued to lose jobs, and a strike resulted in job losses in information.

Health care added 46,000 jobs in May, with increases occurring in ambulatory health care services (+24,000), hospitals (+17,000), and nursing care facilities (+5,000). Over the year, health care employment has increased by 487,000.

In May, mining employment continued to decline (-10,000). Since reaching a peak in September 2014, mining has lost 207,000 jobs. Support activities for mining accounted for three-fourths of the jobs lost during this period, including 6,000 in May.

Employment in information declined by 34,000 in May. About 35,000 workers in the telecommunications industry were on strike and not on company payrolls during the survey reference period.

Within manufacturing, employment in durable goods declined by 18,000 in May, with job losses of 7,000 in machinery and 3,000 in furniture and related products.

Employment in professional and business services changed little in May (+10,000), after increasing by 55,000 in April. Within the industry, professional and technical services added 26,000 jobs in May, in line with average monthly gains over the prior 12 months. Employment in temporary help services was little changed over the month (-21,000) but is down by 64,000 thus far this year.

Employment in other major industries, including construction, wholesale trade, retail trade, transportation and warehousing, financial activities, leisure and hospitality, and government, changed little over the month.

The average workweek for all employees on private nonfarm payrolls was unchanged at 34.4 hours in May. The manufacturing workweek increased by 0.1 hour to 40.8 hours, and manufacturing overtime was unchanged at 3.2 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls was unchanged at 33.6 hours.

In May, average hourly earnings for all employees on private nonfarm payrolls increased by 5 cents to $25.59, following an increase of 9 cents in April. Over the year, average hourly earnings have risen by 2.5 percent. Average hourly earnings of private-sector production and nonsupervisory employees increased by 3 cents to $21.49 in May.

The change in total nonfarm payroll employment for March was revised from +208,000 to +186,000, and the change for April was revised from +160,000 to +123,000. With these revisions, employment gains in March and April combined were 59,000 less than priously reported. Over the past 3 months, job gains have averaged 116,000 per month.

This is really, really weak — and no one should let the lower unemployment rate excuse the weakness.

The economy lost 22,000 jobs after considering revisions (+38K minus the 23K downward revision to March minus the 37K hit to April). If one adds back the 35,000 striking workers at Verizon who were considered unemployed (as they should be), only 13,000 jobs were added.

More in a bit after review.

Not seasonally adjusted results

If I had had a chance to evaluate it beforehand, I would have set the bar for actualy job additions at 1.05 million overall and 1.025 million in the private sector. The actual results: +651K and +697K, respectively — the worst May performances since 2011 and 2009, respectively.

  • A back-of-envelope comparison of this year’s seasonal conversions to that seen in the past two years indicates that the actual job additions just noted should have converted to a seasonally adjusted loss of about 40,000 in each instance:
  • Average 2014 and 2015 average total nonfarm adds of 930K converted to an average of 243K after seasonal adjustments. If this year’s adjustment had been consistent with the past two years, May 2016′s 651K would have come in at 36K jobs LOST instead of the +38K reported.

Average 2014 and 2015 average total private-sector adds of 977K converted to an average of 235K after seasonal adjustments. If this year’s adjustment had been consistent with the past two years, May 2016′s 697K would have come in at 45K jobs LOST instead of the +25K reported.

UPDATE (figures involved are seasonally adjusted unless indicated otherwise):

  • The malaise indicators went Code Red. The civilian labor force shrunk by 458K. The participation rate of 62.6 percent is the lowest figure this year, and is back at a late-1970s level. Not in Labor force is 94.7 million, probably an all-time high. Household Survey employent is 44K lower than it was in February.
  • The participation rate for African-American men dropped by a full point to 67.1 percent.
  • Full-time employment is down 6K since January, while part-time employment is up by 572K.
  • Manufacturing has lost 80K jobs in the past 12 months. Construction has lost 20K in the past two months.
  • The 64K in lost temp jobs this year noted in the BLS report would seem to indicate that many employers are throwing temps overboard becasue of weakening conditions while hanging onto people who are on their own payrolls.
  • Food Service and Drinking Places churned out another 22.2 jobs (188K before seasonal adjustment).
  • Average weekly earnings of $880.30 is only $2.15 higher than it was in January — a puny 0.244 percent increase, which would annualize out to about 0.6 percent. Where is this “earnings growth” Mark Zandi touted on the ADP conference call yesterday?

UPDATE 2: Zero Hedge“There is no way to spin this number as anything but atrocious.” There’s also no way anyone can possibly believe that only 7.4 million Americans are “unemployed” as a normal person would define it.

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2 Comments

  1. Gross Says Fed Won’t Raise Rates in June After Payrolls Report

    http://www.bloomberg.com/news/articles/2016-06-03/gross-says-fed-won-t-raise-rates-in-june-after-payrolls-report

    bond market bubble due to negative interest rates. If the global economy is so great then why would you need negative interest rates in so many foreign countries? So if the Fed raises rates, most capital will flee for the US (momentarily good for us) causing a global depression which will be bad for all including us.

    Deep Dive Into the Disappointing US Jobs Report

    http://www.bloomberg.com/api/embed/iframe?id=_6lu~zV_TIO82yM3qhfhZQ

    Numerous harsh points about Obama’s the economy is doing great propaganda.

    Jobs tumble in May

    http://video.cnbc.com/gallery/?video=3000522962

    Comment by dscott — June 3, 2016 @ 10:24 am

  2. [...] of pretty bad days. The Post had to endure having to cover, and cover for, an absolutely awful jobs report released Friday morning. That news made their beloved Dear Leader, who had just celebrated the [...]

    Pingback by BizzyBlog — June 4, 2016 @ 5:12 pm

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