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July 5, 2013

BLS Better but not Great

July 5, 2013

BLS Better but not Great

This is my monthly look inside the BLS Employment Situation Report. There are two BLS Surveys: the Establishment and the Household. Establishment surveys about 141,000 businesses and government agencies, representing approximately 486,000 individual worksites. It is taken each month during the week which includes the 12th of the month. Household is a survey of 60,000 households taken each month during the week which included the 12th of the month.

Each item below is suffixed with (H) if it is from the Household Survey, (E) if it is from the Establishment Survey, and (B) if it is from both.

– Nominal Nonfarm jobs was +195,000. (E). The two previous months’ gains were revised to +195,000 (May) and +199,000 (April). Those had been +175,000 (May) and +165,000. That is a gain (for May and April) of 54,000 from the previous report making the net gain in jobs since the last report of 249,000.

– the size of the civilian noninstitutional adult population increased by 177,000 in June to 245,552,000 (H). With a labor participation rate of 63.5% 112,400 more jobs were necessary to keep pace with population growth. We had 136,600 more jobs added than that including the changes from April and March. (H) The Employment/Population ratio was up 58.6% to 58.7%.

Note that both the Labor Participation Rate and the Employment/Population Ratios were up last month. This is a healthy sign but will not likely continue. The decreased growth rate in civilian noninstitutional adult population is partly responsible for the ratios going up. This is a function of the varying accuracy of the Household Survey.

The civilian noninstitutional population is 2,297,000 (H) more than 12 months ago. With a labor participation rate of 63.5% we require 1,459,000 more jobs in the past 12 months to keep pace with population growth. We had 1,610,000 (H) more folks working. The increase in real (population adjusted) jobs in the past year is 151,000.

– Real (population adjusted) job growth in May was 136,600. This accounts for the changes for April and May. – the Unemployment Rate was 7.557% barely up from 7.555% in May 2013(B). – Average hourly earnings was $24.01 up from $23.91 in May 2013 (E) – Average work week was 34.5 hours the same as 34.5 hours April 2013 (E) – Private jobs were +202,000. Government jobs were -7,000 (E)

-Good producing jobs were +8,000. The two previous months were revised to -17,000 and unchanged (E)

-The size of the civilian labor force rose from 155,658,000 to155,835,000 an increase 177,000 of a good bit smaller that the previous increase of 420,000. (H)

-The labor participation rate (percent of adult noninstitutionalized population who are part of the labor force) was 63.5.% up from 63.4%. This marks 2 consecutive months of increase. It was 63.8% a year ago. (H) This, not the unemployment rate, is the number which should get everyone’s attention. It is this 63.5% of the adult noninstitutionalized population who get pay checks and contribute to GDP.

 

According to the 4 week moving average of Initial Jobless Claims, 1,382,000 people lost their jobs in the last 4 weeks. That normalizes to 1,497,000 lost jobs in a calendar month (there are about 13 4-week periods in a 12 month year.) This is down from the previous month’s 1,527,500 jobs lost/month.

In June 2013 BLS measured 4 sets of people entering or leaving the jobs market:

– Job losers and persons who completed temporary jobs was 6,119,000 down 28,000 from previous month’s Job Losers and down 1.002,000 from June 2012. (H)

– Job leavers was 1,030,000. This includes anyone who retired or voluntarily left working. This up 86,000 from previous month and up 94,000 from June 2012. (H)

-Reentrants was 3,291,000. Reentrants are previously employed people who were looking for a job and found one. This was -42,000 from the previous month and +38,000 from June 2012.(H)

-New entrants were 1,259,000. These are people who never worked before and who are entering the labor force for the first time. This was -9,000 from previous month and -59,000 from June 2012.

The presentation of the total change in jobs is like looking at the final score of a game. The details tell the story:

– 160,000 more people are working

– 177,000 more people are in the civilian labor force

June’s BLB Report was good by comparison with the weak or mediocre report of the recent months but it is by no means a report indicating that the jobs market has moved into a higher gear.

The unemployment rate increased 0.002%. We are +151,000 real (population adjusted) jobs for the past 12 months. This is not what a recovery looks like.

The economy is failing to produce jobs for people entering the labor force for the first time. We still have underlying serious issues with the jobs market. These issues are structural not cyclical.

Looking at the data for June there were 432,000 more people working part time than in May.  This implies that the number of people working full time actually fell.

The U.S. economy is no longer producing jobs for folks who do not have a college degree or recognized trade skills. Jobs performed by those without education or skills are either being automated or offshored. The very large increases in the cost of college education are making education less affordable as it becomes more necessary.

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