August jobs report: overall progress, with some new highs and some givebacks

– by New Deal democrat

HEADLINES:
  • +201,000 jobs added
  • U3 unemployment rate unchanged at 3.9%
  • U6 underemployment rate declined -0.1% from 7.5% to 7.4% (NEW EXPANSION LOW)
Here are the headlines on wages and the broader measures of underemployment:
Wages and participation rates
  • Not in Labor Force, but Want a Job Now:  rose 226,000 from 5.163 million to 5.379 million
  • Part time for economic reasons: fell -188,000 from 4.567 million to 4.379 million
  • Employment/population ratio ages 25-54: declined -0.2% from 79.5% to 79.3%
  • Average Weekly Earnings for Production and Nonsupervisory Personnel: rose $.07 from  $22.66 to $22.73, up +2.8% YoY.  (Note: you may be reading different information about wages elsewhere. They are citing average wages for all private workers. I use wages for nonsupervisory personnel, to come closer to the situation for ordinary workers.)  (NEW EXPANSION HIGH)
Holding Trump accountable on manufacturing and mining jobs

 Trump specifically campaigned on bringing back manufacturing and mining jobs.  Is he keeping this promise?  
  • Manufacturing jobs fell -3,000 for an average of +21,000/month in the past year vs. the last seven years of Obama’s presidency in which an average of 10,300 manufacturing jobs were added each month.
  • Coal mining jobs were unchanged for an average of +50/month vs. the last seven years of Obama’s presidency in which an average of -300 jobs were lost each month

June was revised downward by -40,000. July was also revised downward by -10,000, for a net change of -50,000.

The more leading numbers in the report tell us about where the economy is likely to be a few months from now. These were mixed.
  • the average manufacturing workweek was unchanged at 41.0 hours.  This is one of the 10 components of the LEI.
  • construction jobs increased by +23,000. YoY construction jobs are up +297,000.
  • temporary jobs increased by +10,000.
  • the number of people unemployed for 5 weeks or less increased by +117,000 from 2,091,000 to 2,208,000.  The post-recession low was set three months ago at 2,034,000.
Other important coincident indicators help  us paint a more complete picture of the present:
    • Overtime was unchanged at 3.5 hours.
    • Professional and business employment (generally higher-paying jobs) increased by +53,000 and  is up +519,000 YoY.
  • the index of aggregate hours worked for non-managerial workers rose by 0.2%.
  •  the index of aggregate payrolls for non-managerial workers rose by 0.4%.
Other news included:
  • the  alternate jobs number contained  in the more volatile household survey decreased by  -423,000  jobs.  This represents an increase of 2,071,000 jobs YoY vs. 2,330,000 in the establishment survey.
  • Government jobs decreased by -3,000.
  • the overall employment to population ratio for all ages 16 and up decreased -0.2% from 60.5% m/m to 60.3% but is up 0.2% YoY.
  • The labor force participation rate decreased from 62.9% to 62.7% and is down -0.2% YoY.
SUMMARY
This was a mixed report with an overall positive tone.
Most of the negatives, such as the prime age employment population ratio simply gave back the very good numbers from last month and returned us to where we were two months ago. Still, several leading components did decline, such as short time unemployment, past revisions, and employment as measured by the more volatile household survey.
The positives showed continued improvement in some problematic areas. Most importantly, nominal YoY wage growth for ordinary workers increased to an expansion high of +2.8%. Involuntary part time employment continued to fall, as did the broad underemployment rate.
Overall, we continue to make progress, and so long as short term leading indicators of consumption continue to do well, so should employment.