September 2, 2016

August 2016 Employment Situation Summary (090216): 151K Payroll Jobs Added, Unemployment Rate Stays at 4.9 Percent

Filed under: Economy,Taxes & Government — Tom @ 7:15 am

Predictions:

  • Per Yahoo’s Economic Calendar — 175K-190K jobs added, unemployment rate either stays the same at 4.9 percent or drops to 4.8 percent.
  • Associated Press (update: Also, at Bloomberg) — 180K Jobs added rate drops to 4.8 percent.
  • UPDATE: In Wednesday’s ADP conference call, max Hillary Clinton contributor Mark Zandi at Moody’s said that August has come in below expectations and has then typically been revised up in future releases. He therefore says not to be surprised at a number as low as 150K jobs added.
  • UPDATE: Range of jobs-added predictions at Zero Hedge — 150K to 225K

The report will be here at 8:30 a.m. Because of other commitments, I haven’t had a chance to review the raw, not seasonally adjusted numbers, and will do so after the release.

HERE IT IS (when active, full HTML release) — Well, Zandi called the initial reading and we’ll have to see if future revisions go up (also, reasonableness of seasonally adjusted number is pending a review of the raw data):

Total nonfarm payroll employment increased by 151,000 in August, and the unemployment rate remained at 4.9 percent, the U.S. Bureau of Labor Statistics reported today. Employment continued to trend up in several service-providing industries.

Household Survey Data

The number of unemployed persons was essentially unchanged at 7.8 million in August, and the unemployment rate was 4.9 percent for the third month in a row. Both measures have shown little movement over the year.

Among the major worker groups, the unemployment rates for adult men (4.5 percent), adult women (4.5 percent),teenagers (15.7 percent), Whites (4.4 percent), Blacks (8.1 percent), Asians (4.2percent), and Hispanics (5.6 percent) showed little change in August.

The number of long-term unemployed (those jobless for 27 weeks or more) was essentially unchanged at 2.0 million in August. These individuals accounted for 26.1 percent of the unemployed.

Both the labor force participation rate, at 62.8 percent, and the employment-population ratio, at 59.7 percent, were unchanged in August.

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was little changed at 6.1 million in August. These individuals, who would have preferred full-time employment, were working part time because their hours had been cut back or because they were unable to find a full-time job.

… Establishment Survey Data

Total nonfarm payroll employment rose by 151,000 in August, compared with an average monthly gain of 204,000 over the prior 12 months. Employment continued to trend up in several service-providing industries.

Employment in food services and drinking places continued to trend up over the month (+34,000). Over the year, the industry has added 312,000 jobs.

Social assistance added 22,000 jobs over the month, with most of the growth in individual and family services (+17,000).

In August, employment in professional and technical services edged up (+20,000), about in line with its average monthly gain over the prior 12 months (+24,000).

Financial activities employment continued on an upward trend in August (+15,000), with a gain in securities, commodity contracts, and investments (+6,000). Over the year, financial activities has added 167,000 jobs.

Health care employment continued to trend up in August (+14,000), but at a slower pace than the average monthly gain over the prior 12 months (+39,000). In August, hospitals added 11,000 jobs, and employment in ambulatory health care services trended up (+13,000). A job loss in nursing and residential care facilities (-9,000) offset a gain in July.

Employment in mining continued to trend down in August (-4,000). Since reaching a peak in September 2014, employment in mining has declined by 223,000, with losses concentrated in support activities for mining.

Employment in several other industries–including construction, manufacturing, wholesale trade, retail trade, transportation and warehousing, temporary help services, and government–changed little over the month.

The average workweek for all employees on private nonfarm payrolls decreased by 0.1 hour to 34.3 hours in August. In manufacturing, the workweek declined by 0.2 hour to 40.6 hours, while overtime was unchanged at 3.3 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls decreased by 0.1 hour to 33.6 hours.

In August, average hourly earnings for all employees on private nonfarm payrolls rose by 3 cents to $25.73. Over the year, average hourly earnings have risen by 2.4 percent. Average hourly earnings of private-sector production and nonsupervisory employees increased by 4 cents to $21.64 in August.

The change in total nonfarm payroll employment for June was revised down from +292,000 to +271,000, and the change for July was revised up from +255,000 to +275,000. With these revisions, employment gains in June and July combined were 1,000 less than previously reported. Over the past 3 months, job gains have averaged 232,000 per month.

The decline in the work week certainly means a decline in average weekly pay, which I’ll get to along with other items shortly.

Raw Numbers: This will have to wait for a bit, as I can’t get to the tables at the moment. Update: No need to produce tables here. Raw job adds overall and in the private sector were 224K and 33K, respectively. In historical context, the seasonal conversions to 151K and 126K are reasonable. A genuinely booming economy should have added about 450K and 225K, respectively.

UPDATE (references are to seasonally adjusted figures unless otherwise indicated):

  • Household Survey employment only increased by 97K after exploding by 420K last month. The average during the past four months has been +151K.
  • The unemployment rates for black men (from 8.1 percent to 7.6 percent) and black women (7.3 percent to 7.1 percent) both dropped. All of the increase in the overall black workforce participation rate (from 56.1 percent to 56.9 percent) took place among women.
  • The number of men employed in the “prime working years” 25-54 bracket has only increased by 13,000 in the past four months.
  • Full-time workers somehow increased by 409,000, while part-timers increased by 288,000. In the past 12 months, the increases have been 2.256 million and 258,000, respectively.
  • As to payroll jobs, it was a disaster for blue-collar workers: Manufacturing was down 14K; Construction employment fell by 6K, and mining by 4K.
  • Government employment increased by 25K, and private-sector employment only increased by 126K.
  • An increase in raw employment at temporary help services of 59K to 2.946 million led to a seasonally adjusted decrease of 3.1 K.
  • The increase of 2.4 percent in the average hourly wage in the past 12 months (from $25.12 to $25.73) is still unimpressive, and contradicts all the “wages are really rising” memes we continue to hear. It’s worse when you look at average weekly pay, which is only up by 1.5 percent thanks to fewer hours (from $869.15 to $882.54; Update: Zero Hedge says this is the worst year-over-year result in 32 months). Thanks to August’s average weekly hours reduction, average weekly pay in the past month fell by $1.54.

OVERALL: A less-than-stellar result. I’d be tempted be relatively unconcerned about the overall payroll jobs number if it weren’t for the cratering in the blue-collar sectors, the decline in the work week, and the continued tepid growth in the hourly wage rate. Today’s report isn’t a recession alarm, but it does nothing to dispel fears of one in the near future.

The really annoying aspect of all of this is that eight years of ultra-low interest rates haven’t genuinely helped the economy turn around. It’s as if the Obama administration felt it could do anything it wanted in terms of overspending, new program creation (e.g., Obamacare), over-regulation and private-sector bullying and intimidation (Operation Choke Point), but that low interest rates would offset their efforts and still enable the economy to grow decently. It didn’t happen, as anyone with a brain could have predicted. A country needs monetary policy and fiscal/economic policy working together. We haven’t seen any of that since the recession.

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