Today, the Bureau of Labor Statistics released its Monthly Payroll Report.
Initial Thoughts
- The divergence between jobs and employment continues for the ninth month but lessened in December.
- However, the full time employment divergence did not budge.
- The divergences between jobs and employment date back to March.
Payrolls vs Employment Since March 2022
- Nonfarm Payrolls: +2,887,000
- Employment Level: +916,000
- Full Time Employment: -288,000
Full time employment is down 288,000 since March and down by 444,000 since May!
Mainstream media misses general miss the big picture captured in my lead chart. This is not strong employment growth.
The internal details have been weak for 9 month and I have been talking about the discrepancy for six of them. The charge of employment “noise” is a siren song.
Job Report Details
- Nonfarm Payroll: +223,000 to 153,743 – Establishment Survey
- Civilian Non-institutional Population: +136,000 to 264,844,000
- Civilian Labor Force: +439,000 to 164,964,000 – Household Survey
- Participation Rate: +0.1 to 62.3% – Household Survey
- Employment: +717,000 to 159,244– Household Survey
- Unemployment: -278,000 to 5,722,000- Household Survey
- Baseline Unemployment Rate: -0.1 to 3.5% – Household Survey
- Not in Labor Force: -303,000 to 99,878,000 – Household Survey
- U-6 unemployment: -0.2 to 6.5% – Household Survey
Revision Details
- The change in total nonfarm payroll employment for October was revised down by 21,000, from +284,000 to +263,000.
- The change for November was revised down by 7,000, from +263,000 to +256,000.
- With these revisions, employment gains in October and November combined were 28,000 lower than previously reported.
Change in Nonfarm Payrolls
Leisure and hospitality, and education and health services were the strong gainers in December.
Manufacturing has peaked this cycle. For discussion, please see ISM Manufacturing Now Signals Recession for the First Time in 30 Months
Part-Time Jobs
- Involuntary Part-Time Work: +190,000 to 3,878,000
- Voluntary Part-Time Work: +402,000 to 21,628,000
- Total Full-Time Work: -1,000 to 132,299,000
- Total Part-Time Work: -679,000 to 26,794,000
The above numbers never total correctly due to the way the BLS makes adjustments. I list them as reported.
In May, the BLS said full-time employment was 132,743,000. Today it says 132,299,000. That’s a decline of 444,000 full time jobs in the past 7 months.
Everything points to part time jobs to fueling the job gains since May with divergences starting in March.
Hours and Wages
- Average weekly hours of all private employees fell 0.1 hour to 34.3 hours.
- Average weekly hours of all private service-providing employees fell 0.1 hour to 33.3 hours.
- Average weekly hours of manufacturers fell 0.1 hour to 40.1 hours.
This is the second consecutive month of declining work hours. A tenth of an hour may not sound like much but multiply it by 159,244,000 employees and it’s 15,924,400 hours less work.
Hourly Earnings
It’s déjà vu view month for earnings. Last month, I reported “Average Hourly Earnings of All Nonfarm Workers rose $0.18 to $32.82.” And for production workers I reported “Average hourly earnings of Production and Supervisory Workers rose $0.19 to $28.10.”
Here are the December numbers.
Average Hourly Earnings of All Nonfarm Workers rose $0.09 to $32.82. A year ago the average wage was $31.38. That’s a gain of 4.6%.
Average hourly earnings of Production and Nonsupervisory Workers rose $0.12 to $28.07. A year ago the average wage was $26.55. That’s a gain of 4.7%.
Synopsis: For nonfarm workers, wages rose 9 cents to the same level as last month. For production workers, wages rose 12 cents to a level 3 cents below last month.
Despite the gains, wages have not kept up with inflation.
Birth Death Model
Starting January 2014, I dropped the Birth/Death Model charts from this report.
The birth-death model pertains to the birth and death of corporations not individuals except by implication.
For those who follow the numbers, I retain this caution: Do not subtract the reported Birth-Death number from the reported headline number. That approach is statistically invalid.
The model is wrong at economic turning points and is also heavily revised and thus essentially useless.
Alternative Measures of Unemployment
Table A-15 is where one can find a better approximation of what the unemployment rate really is.
The official unemployment rate is 3.5%.
U-6 is much higher at 6.5%. Both numbers would be way higher still, were it not for millions dropping out of the labor force over the past few years.
Some of those dropping out of the labor force retired because they wanted to retire. Some dropped out over Covid fears and never returned. Still others took advantage of a strong stock market and retired early.
The rest is disability fraud, forced retirement (need for Social Security income), and discouraged workers.
Unemployment Rate
In September, the unemployment rate was a record low 3.5 percent. Today it matched that record low at 3.5 percent.
However, there are 99,878,000 people age 16 and older who are not working at all. They are not employed but not unemployed.
Changing Employment Dynamics
Covid-19 had an enormous impact on the labor force. Some job losses are permanent, millions of other other people now work from home.
Stimulus provided incentives to not work and some of those workers are returning to the labor markets now.
As of November 2022, there were 22 million workers age 60 and over. Millions will retire soon which will put upward pressure on hiring and wages.
Household Survey vs. Payroll Survey
- The payroll survey (sometimes called the establishment survey) is the headline jobs number. It is based on employer reporting.
- The household survey is a phone survey conducted by the BLS. It measures employment, unemployment and other factors.
If you work one hour, you are employed. If you don’t have a job and fail to look for one, you are not considered unemployed, rather, you drop out of the labor force.
Looking for job openings on Jooble or Monster or in the want ads does not count as “looking for a job”. You need an actual interview or send out a resume.
These distortions artificially lower the unemployment rate, artificially boost full-time employment, and artificially increase the payroll jobs report every month.
Q&A What’s Going On?
Q: Hey Mish, What’s Going On?
A: People are taking on second part time jobs to make ends meet. But overall employment (the total number of people working is stagnant.
As I have been saying for many months, don’t watch the unemployment rate, watch employment levels.
The employment divergence lessened in December but the full time employment divergence didn’t.
Expect a Long But Shallow Recession With Minimal Rise in Unemployment
Given hiring pressures and boomer retirements, Expect a Long But Shallow Recession With Minimal Unemployment Rise
The stock market is another issue. For discussion, please see Artificial Wealth vs GDP: Why Earnings and the Stock Market Will Get Crushed
While I expect the unemployment rate will not rise much in this recession, at least compared to the average recession impact, employment is another matter.
There’s a Huge Temporary Growth in Gig Work to Make Ends Meet
As noted on January 1, There’s a Huge Temporary Growth in Gig Work to Make Ends Meet
That puts a spotlight what I have been saying for months, that strength in these job reports have been exaggerated for months.
This post originated at MishTalk.Com
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[…] source […]
and Pradhan.
Hmmm… what do they do for you, and what’s the environment like?
well aren’t we full of ourselves…