Initial Reaction
Economists missed the mark by a mile. The Econoday consensus was for a payroll expansion of 180,000 jobs. At least the reported 75,000 beat the ADP forecast of 27,000. But revisions were strongly to the downside.
Job Revisions
The change in total nonfarm payroll employment for March was revised down from +189,000 to +153,000, and the change for April was revised down from +263,000 to +224,000. With these revisions, employment gains in March and April combined were 75,000 less than previously reported. After revisions, job gains have averaged 151,000 per month over the last 3 months.
BLS Jobs Statistics at a Glance
- Nonfarm Payroll: +75,000 – Establishment Survey
- Employment: +113,000 – Household Survey
- Unemployment: +64,000 – Household Survey
- Involuntary Part-Time Work: -299,000 – Household Survey
- Voluntary Part-Time Work: -107,000 – Household Survey
- Baseline Unemployment Rate: 3.6% – Household Survey
- U-6 unemployment: Unchanged at 7.1% – Household Survey
- Civilian Non-institutional Population: +168,000
- Civilian Labor Force: +176,000 – Household Survey
- Not in Labor Force: -8,000 – Household Survey
- Participation Rate: +0.0 to 62.8% – Household Survey
Employment Report Statement
Total nonfarm payroll employment edged up in May (+75,000), and the unemployment rate remained at 3.6 percent. Employment continued to trend up in professional and business services and in health care.
Unemployment Rate – Seasonally Adjusted
The above Unemployment Rate Chart is from the BLS. Click on the link for an interactive chart.
Nonfarm Employment Change from Previous Month
Hours and Wages
Average weekly hours of all private employees was flat at 34.4 hours. Average weekly hours of all private service-providing employees was flat at 33.3 hours. Average weekly hours of manufacturers was flat at 40.6 hours.
Average Hourly Earnings of All Nonfarm Workers rose $0.06 to $27.86. That a 0.22% gain. Average hourly earnings of private service-providing employees rose $0.06 to $27.58, a gain of 0.22%. Average hourly earnings of manufacturers rose $0.08 to $27.57, a gain of 0.29%.
Average hourly earnings of Production and Supervisory Workers rose $0.07 to $23.38. That’s a 0.30% gain. Average hourly earnings of private service-providing employees rose $0.07 to $23.11, a gain of 0.30%. Average hourly earnings of manufacturers rose $0.07 to $23.03 a gain of 0.32%
Year-Over-Year Wage Growth
- All Private Nonfarm from $26.99 to $27.83, a gain of 3.1%
- All production and supervisory from $22.62 to $23.38, a gain of 3.4%.
For a discussion of income distribution, please see What’s “Really” Behind Gross Inequalities In Income Distribution?
Birth Death Model
Starting January 2014, I dropped the Birth/Death Model charts from this report. 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. Should anything interesting arise in the Birth/Death numbers, I will comment further.
Table 15 BLS Alternative Measures of Unemployment
Table A-15 is where one can find a better approximation of what the unemployment rate really is.
Notice I said “better” approximation not to be confused with “good” approximation.
The official unemployment rate is 3.6%. However, if you start counting all the people who want a job but gave up, all the people with part-time jobs that want a full-time job, all the people who dropped off the unemployment rolls because their unemployment benefits ran out, etc., you get a closer picture of what the unemployment rate is. That number is in the last row labeled U-6.
U-6 is much higher at 7.1%. 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. The rest is disability fraud, forced retirement, discouraged workers, and kids moving back home because they cannot find a job.
Strength is Relative
It’s important to put the jobs numbers into proper perspective.
- In the household survey, if you work as little as 1 hour a week, even selling trinkets on eBay, you are considered employed.
- In the household survey, if you work three part-time jobs, 12 hours each, the BLS considers you a full-time employee.
- In the payroll survey, three part-time jobs count as three jobs. The BLS attempts to factor this in, but they do not weed out duplicate Social Security numbers. The potential for double-counting jobs in the payroll survey is large.
Household Survey vs. Payroll Survey
The payroll survey (sometimes called the establishment survey) is the headline jobs number, generally released the first Friday of every month. It is based on employer reporting.
The household survey is a phone survey conducted by the BLS. It measures unemployment and many 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 jobs on Monster 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.
Final Thoughts
The past several jobs reports have had wild fluctuations.
Revisions add to the discrepancies.
Last month I commented “jobs reports in 2019 have been much weaker than the headline numbers suggest. One set of numbers is wrong.”
I was referring to the difference between jobs and employment. Year-over-year employment is up by 1,219,000 an average of 101,583 per month. Jobs are allegedly up 2,350,000, an average of 195,833 per month.
I don’t buy it. At least one set of numbers is wrong.
Mike “Mish” Shedlock
“Social Security receipts is a legally enforced accounting number.”
As I said, some people do not report every month. Self-employed for example.
OK, but we’re looking for changes. Not exact figures. I would guess the pct who don’t report doesn’t vary a lot.
Alternate data sets give the government leaches a do nothing job. The politicians force bureaucrats to massage the data.
Leaches? Do you mean leeches? Do you actually know any? Have you talked with any?
Why do folks like you feel you must resort to name calling of those you disagree with rather than engage in an exchange of ideas? Do you think that name calling is going to change anyone’s mind on anything? Is name calling supposed to be clever or somehow demonstrate intellectual or cultural superiority?
That kind of behavior should be left to those who are auditioning for Fox News or for a gig at the current White House.
Leech and leach both apply to government bloodsuckers and government looters. They produce no wealth. They subtract from GNP. The few virtuous employees enforce the law, protect, and allocate resources to public infrastructure that should be privately administered and maintained.
Do I know any? Yes, I have known military, government arbitrators, AIDS vaccine researchers, professors, whom I count at least half virtuous. Motor vehicle registration, inspectors, regulators, bureaucrats, highway toll takers, and any other I can think of are not virtuous.
I judge government by value to society. The proper judgment is leach or leech and there is no name calling. Just the rational facts.
Ah, the awesome arrogance and heartlessness of the affluent and those educated beyond their intelligence.
Virtuous? What would you do with all those who lack the high moral standards to become educated and climb out of low level jobs or outright poverty? Surely that is their fault. They just lack the moral fiber. It’s a pity we can’t find a new continent to ship them all off to so we don’t have to put up with them in our lives. Oh, wait… that’s what we have prisons for… to make sure we don’t have to interact with them.
If you have not lived a time in your life when you are one broken refrigerator or one busted transmission from economic disaster you are not qualified to talk of these things. If you have never had to worry about where to get food to feed your kids you no nothing of the “non-virtuous”.
Your disdain for these folks is not gonna make them disappear. Oh, well. Let them eat cake.
Every person should take pride in achieving education beyond their intellect. Education is free. Many of us wish school vouchers allowed those who hunger for education to have the opportunity to learn from the best schools.
There are many opportunities to become valuable to society. Ad astra per aspera. Those who have no ambition are contemptible. Those who have no respect for themselves deserve the low value wages they have earned. No workee no eatee. Those are not my responsibility to feed, clothe, and house.
I am self employed. I file estimated taxes every quarter. Wonder if this drives numbers up on those months when estimated tax filings are required. April, June, September and January.
Social Security receipts is a legally enforced accounting number. Why bother with telephone surveys and employer reports?
Because people selling a few trinkets on eBay can be counted as “employed”, even though they pay no Social Security tax.