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December 7, 2012

Inside the November BLS Jobs Report

December 7, 2012

Inside the November BLS Jobs Report

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. The Household 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.

What we should look at each month is not the nominal number of new jobs but rather recognize that we need about 130,000 more jobs each month to make up for the increase in population and keep the same percentage of the population working. We adjust GDP for inflation. We distinguish between nominal and real wages. There is no reason to mindlessly regard nominal rather that real (population adjusted) jobs as important. If we are not gaining 130,000 jobs per month we are going nowhere. Looked at through the dark lens of politics, 6,240,000 jobs should be gained in a four year Presidential term.

– Nominal Nonfarm jobs was +141,000. (E). The two previous months were revised to +138,000 (October) and +132,000 (September). Those had been 171,000 and 148,000. That is a loss of 49,000 from the previous report making the net gain in jobs since the last report 92,000.
– Real (population adjusted) job growth was 19,500. It we take out the 49,000 jobs lost from the revisions to the 2 previous months we would have real jobs loss in November.
– the Unemployment Rate was 7.746% down from 7.875% in October 2012 (B)
– Average hourly earnings was $23.63 up from $23.59 in October 2012 (E)
– Average work week was 34.4 hours down from a revised 34.5 hours in October 2012 (E)
– Private jobs were +147,000. Government jobs were -1,000 (E)

-Good producing jobs were -22,000. The two previous months were +18,000 and -17,000. (E)

-The size of the civilian labor force fell from 155,641,000 to 155,291,000 a decrease of 350,000. (H) This difference is in the Household Survey which is only a report of what people say regarding whether they are in or out of the labor force. The drop in the unemployment rate was a result of those 350,000 fewer people saying that they are in the labor force. If the Unemployment Rate falls because people left the work force rather than because there is a larger percentage of the population working, this is not good news.

-The labor participation rate (percent of adult non-institutionalized population who are part of the labor force) was 63.6% down from 63.8% in October. It was 64.0% a year ago. (H) This, not the unemployment rate, is the number which should get everyone’s attention.

– the size of the civilian noninstitutional adult population increased by 191,000 in November to 244,174,000 (H). With a labor participation rate of 63.6% 121,500 more jobs were necessary to keep pace with population growth. We had 19,500 more jobs added than that. (H) The Employment/Population ratio was 58.7% a decrease of 0.1% in the past month. All of the gain in jobs in the last year is attributable to population growth. The civilian noninstitutional population is 3,733,000 (H) more that 12 months ago. With a labor participation rate of 63.6% we require 2,374,000 more jobs in the past 12 months to keep pace with population growth.

According to the 4 week moving average of Initial Jobless Claims, 1,632,000 people lost their jobs in the last 4 weeks. That normalizes to 1,758,400 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 1,591,400 lost jobs/month.

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

– Job losers and persons who completed temporary jobs was 6,413,000 down 162,000 from October’s Job Losers and down 1,186,000 from November 2011. (H)

– Job leavers was 922,000. This includes anyone who retired or voluntarily left working. This was down 88,000 from previous month and down 83,000 from November 2011. (H)

-Reentrants was 3,295,000. Reentrants are previously employed people who were looking for a job and found one. This was -88,000 from previous month and -84,000 from November 2011.(H)

-New entrants were 1,327,000. These are people who never worked before and who are entering the labor force for the first time. This was +26,000 from previous month and +51,000 from November 2011.

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

– 146,000 more people are working

– 350,000 fewer people are in the civilian labor force

– 162,000 fewer people lost their jobs

– 88,000 fewer people left their jobs

– 88,000 fewer reentrants obtained jobs.

Real jobs growth remains anemic. The health of the economy is best measured by the percentage of the adult noninstitutionalized civilian population who are working.

This is from my weekly RateWatch newsletter on mortgages and macroeconomics. If you would like to receive this you may sign up here.
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