June 2, 2017

May 2017 Employment Situation Summary (060217): 138K SA Jobs Added, Prior-Month Revisions are -66K; Unemployment Rate DROPS to 4.3 Pct. on Decline in Workforce; Seasonal Adjustments Understate True Strength by 75K

Filed under: Economy,Taxes & Government — Tom @ 8:28 am

Predictions:

  • Yahoo’s Economic Calendar — The “market” predictions, which probably haven’t been adjusted to consider yesterday’s strong ADP private-sector payroll additions of 253,000 are for 185,000 total nonfarm payroll additions and 172,000 in the private sector, with the unemployment rate staying at 4.4 percent.
  • Yahoo’s Economic Calendar — The “Briefing.com” predictions,  which probably have been adjusted to consider yesterday’s strong ADP private-sector payroll additions of 253,000 are for 215,000 total nonfarm payroll additions and 210,000 in the private sector, and a 4.4 percent unemployment rate.
  • Thursday afternoon, Bloomberg News went with the low end, carrying a prediction of 180,000 jobs added and a 4.4 percent unemployment rate.
  • The Associated Press, in a pre-release dispatch which will disappear into the ether when today’s jobs report is published, has 4.4 percent and 176,000 jobs added

Not seasonally adjusted benchmarks:

Contrary to the hype, the overall payroll jobs news so far this year has not been exceptional:

NSAandSApayrolls0104thru0417

May and June are critical months.

A really strong jobs report today would seen 950,000 not seasonally adjusted total nonfarm payroll adds and 975,000 payroll adds in the private sector.

Other things to watch for include growth in the civilian labor force, the number of full-time job adds (which have been strong this year, more than outweighing the okay but not exception payroll job adds), and growth in pay.

The report will be here at 8:30.

HERE IT IS (full report with tables), and the topside numbers, pending analysis, look like they came from the Obama era, with low jobs added but a reduced unemployment rate:

Total nonfarm payroll employment increased by 138,000 in May, and the unemployment rate was little changed at 4.3 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in health care and mining.

Household Survey Data

The unemployment rate, at 4.3 percent, and the number of unemployed persons, at 6.9 million, changed little in May. Since January, the unemployment rate has declined by 0.5 percentage point, and the number of unemployed has decreased by 774,000.

Among the major worker groups, the unemployment rate for Whites edged down to 3.7 percent in May. The jobless rates for Blacks (7.5 percent), Asians (3.6 percent), and Hispanics (5.2 percent), as well as those for adult men (3.8 percent), adult women (4.0 percent), and teenagers (14.3 percent), showed little or no change.

The labor force participation rate declined by 0.2 percentage point to 62.7 percent in May but has shown no clear trend over the past 12 months. The employment-population ratio edged down to 60.0 percent in May.

… Establishment Survey Data

Total nonfarm payroll employment increased by 138,000 in May, compared with an average monthly gain of 181,000 over the prior 12 months. In May, job gains occurred in health care and mining.

Employment in health care rose by 24,000 in May. Hospitals added 7,000 jobs over the month, and employment in ambulatory health care services continued to trend up (+13,000). Job growth in health care has averaged 22,000 per month thus far in 2017, compared with an average monthly gain of 32,000 in 2016.

Mining added 7,000 jobs in May. Employment in mining has risen by 47,000 since reaching a recent low point in October 2016, with most of the gain in support activities for mining.

In May, employment in professional and business services continued to trend up (+38,000). The industry has added an average of 46,000 jobs per month thus far this year, in line with the average monthly job gain in 2016.

Employment in food services and drinking places also continued to trend up in May (+30,000) and has grown by 267,000 over the past 12 months.

Employment in other major industries, including construction, manufacturing, wholesale trade, retail trade, transportation and warehousing, information, financial activities, and government, showed little change over the month.

The average workweek for all employees on private nonfarm payrolls was unchanged at 34.4 hours in May. In manufacturing, the workweek also was unchanged at 40.7 hours, while overtime edged up by 0.1 hour to 3.3 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls edged down by 0.1 hour to 33.6 hours.

In May, average hourly earnings for all employees on private nonfarm payrolls rose by 4 cents to $26.22. Over the year, average hourly earnings have risen by 63 cents, or 2.5 percent. In May, average hourly earnings of private-sector production and nonsupervisory employees increased by 3 cents to $22.00.

The change in total nonfarm payroll employment for March was revised down from +79,000 to +50,000, and the change for April was revised down from +211,000 to +174,000. With these revisions, employment gains in March and April combined were 66,000 less than previously reported. Monthly revisions result from additional reports received from businesses and government agencies since the last published estimates and from the recalculation of seasonal factors. Over the past 3 months, job gains have averaged 121,000 per month.

There’s obviously a huge disconnect between ADP, which has 1.2 million private-sector job adds so far this year, and BLS, which, after today’s revisions, is just over 800,000. It’s really bad when you have to say that ADP’s figures seem more credible. If this disconnect continues, I suspect that the next annual comprehensive jobs revision which includes this year will be hugely upward, and people will have to start asking what’s going on at BLS.

Not seasonally adjusted job adds were 810,000 total nonfarm and 888,000 in the private sector. Both are six-figure misses, but as will be seen, they’re not as bad as the seasonally adjusted numbers would lead us to believe.

Here are the revised figures, including revisions to March and April:

NSAandSApayrolls0104thru0517

I estimate that May’s seasonal adjustments understate the strength of the underlying raw results by 50,000 in total nonfarm and 75,000 in the private sector. One exemplifying reason: This year’s actuals beat last year by 179,000 jobs overall and 217,000 in the private sector; yet May 2017′s seasonally adjusted figures are only 95,000 and 130,000 higher, respectively.

Other comments (reference is to seasonally adjusted numbers unless otherwise indicated):

  • Almost all of the post-January labor force gains disappeared, as the civilian labor force shrunk by 429K. More worrisome is that Household Survey employment dropped by 233K. Not in Labor Force shot up to just shy of 95 million. I’m making a mental note to revisit jobs data from areas enacting way-high minimum wages to see how much their employment is either not growing or shrinking.
  • Two key African-American unemployment rates are near all-time lows: Overall (16-and-over), 7.5 percent (lowest since December 2000; and 20-and-over men, 6.5 percent (ties for lowest since April 2000). The unemployment for 20-and-over women, at 7.0 percent, is roughly what we’ve been seeing for the past year, and is still a bit above where it was during much of 2007, and roughly a point above where it was in much of 2000 and 2001.
  • Full-time employment shrank by 367K, while part-timers increased by 133K. That said, even after a bad May, year-to-date full-time employment has grown by 1.35 million compared to 532,000 through the first five months of 2016.
  • Blue-collar payroll employment growth was weak (+16K). Manufacturing lost 1,000 jobs, which is a bit suspect, because the raw figures show a pretty substantial 37,000 jobs added. For that matter, construction really added 182,000 jobs, which was seasonally adjusted to 11,000. Actual job additions in construction barely above that level in May 2013, 2014 and 2015 led to average seasonally adjusted results of +31,000.
  • Seasonally adjusted temporary help employment topped 3 million for the first time ever in April, and increased by 12.9K in May.
  • Wage growth continues to be weak (4 cents per hour and $1.38 per week in May; 63 cents [2.5 percent] and $21.67 per month [2.5 percent] in past 12 months). That said, April seems to have been revised up in certain sectors, with single-month increases in weekly pay of roughly 1 percent or more in overall goods-producing and a few other sectors.

Overall: On the Household side, despite the unemployment rate drop, this was a report which should cause some concern, as Obama-era malaise made a one-month comeback which we can’t afford to see repeated. On the Establishment side, the news was not as bleak as the 138K seasonally adjusted figure would lead people to believe, but the raw data shows that it still wasn’t quite as strong as it needed to be.

Share

No Comments

No comments yet.

RSS feed for comments on this post.

Sorry, the comment form is closed at this time.