June 3, 2012

Inside May’s BLS Jobs Report

June 3, 2012

Inside May’s BLS Jobs Report

This is my monthly look inside the BLS Employment Situation Report. Keep in mind that there ate two BLS Surveys: the Establishment Survey and the Household Survey. The 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. The Household Survey is a survey of households taken each month during the week which included the 12th of the month. It is a survey of 60,000 households.

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

– Headline Nonfarm jobs was +69,000. (E) This was after revising April from +115,000 to +77,000.
– Unemployment Rate was 8.2% in compared to 8.1% in April 2012 (B)
– Average hourly earnings was $23.41 up from $23.39 in April 2012 (E)
– Average work week was 34.7 hours the same as April 2012 (E)
– Private jobs were +82,000. Government jobs were -13,000 (E)

Reading beneath the surface:

-Good producing jobs were -15,000. The 3 previous months were +4,000, +38,000, and +20,000. (E)

-The size of the civilian labor force increased from 154,365,000 to 155,007,000 an increase of 642,000. This large increase helps explain why the Unemployment Rate went up. (H)

-The labor participation rate (percent of adult non-institutionalized population who are part of the labor force) rose to 63.8% from 63.6%. It was 64.2% a year ago. This, not the unemployment rate, is the number which should get everyone’s attention. Some of this is structural and some is cyclical. (H)

– the size of the civilian noninstitutional population rose by 182,000 in March. With a labor participation rate of 63.8% 116,000 more jobs were necessary to keep pace with population growth. We had 47,000 fewer jobs added than that. (H)

According to the 4 week moving average of Initial Jobless Claims 1,498,000 people lost their jobs in the last 4 weeks. That normalizes to 1,622,600 lost jobs in a calendar month (there are about 13 4 week periods in a 12 month year.) This is up from the previous month’s 1,567,500 lost jobs/month.

If 1,622,600 people lost their jobs last month and we gained 69000 jobs, how did that happen? The answers are in the Household Survey.

In April 2012 BLS measured 4 sets of people entering or leaving the jobs market:

– Job losers and persons who completed temporary jobs was 6,989,000 up 137,000 from May’s Job Losers and down 1,261,000 from May 2011. (H)

-Job leavers was 891,000. This includes anyone who retired or voluntarily left working. This was down 106,000 from previous month and down 28,000 from May 2011.(H)

-Reentrants was 3,439,000. Reentrants are people who were looking for a job a found one. This was +98,000 from previous month and +3,000 from May 2011.(H)

-New entrants were 1,367,000. These are unemployed persons who never worked before and who are entering the labor force for the first time. This was -17,000 from previous month and +138,000 from May 2011.

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

– 69,000 more people are working

– 643,000 more people are in the civilian labor force

– 137,000 more people lost their jobs

– 106,000 fewer people left their jobs

– 98,000 more reentrants obtained jobs.

The fact that 643,000 more people declared themselves as part of the labor force is the most encouraging part of the report. The fact that the increase in jobs was insufficient to cover the number needed to keep pace with population growth was the most discouraging item.

This is the 3rd consecutive weak jobs report. Coupled with the very weak GDP revision Thursday, it paints a very bleak landscape considering that we are so far into a recovery which featured massive deficits and extraordinarily accommodative monetary policy.
What May’s Jobs Report Did To Rates (CHARTS)