Other than a small 0.1 percent improvement in the unemployment rate, this was a very poor jobs report with private payrolls only +74,000.
Jobs vs Employment
From September 2020 through early 2022, nonfarm payroll job gains and full time employment changes tracked together.
Starting around March of 2022, a divergence between employment and jobs became very noticeable, and I have been discussing the divergence since then.
This month, employment rose by 168,000 vs payrolls up by 142,000. However, full-time employment declined by a whopping 438,000 and manufacturing shed 24,000 jobs!
Job Stats vs One Year Ago
- Nonfarm Payrolls: +2,568,000
- Employment: +142,000
- Full Time Employment: -1,021,000
Job Stats vs Two Years Ago
- Nonfarm Payrolls: +5,498,000
- Employment: +2,676,000
- Full Time Employment: +799,000
In the last year, nonfarm payrolls are up by 2.6 million while employment is only up by 142,000 and full-time employment is down by over 1 million.
Jobs Overview vs Econoday Consensus
- Nonfarm payrolls rose by 142,000 vs the consensus 160,000. But the BLS revised August from 114,000 to 89,000.
- Private payroll rose by 74,000 vs the consensus 136,000. And the revision was -23,000.
- Manufacturing payrolls declined by 24,000 vs the consensus -2,000.
Job Report Details
- Nonfarm Payroll: +142,000 to 158,779,000 – Establishment Survey
- Civilian Non-institutional Population: +212,000 to 268,856,000
- Civilian Labor Force: +120,000 to 168,549,000 – Household Survey
- Participation Rate: +0.0 to 62.7% – Household Survey
- Employment: +168,000 to 161,434,000 – Household Survey
- Unemployment: -48,000 to 7,115,000- Household Survey
- Baseline Unemployment Rate: -0.1 to 4.2% – Household Survey
- Not in Labor Force: +91,000 to 100,306 – Household Survey
- U-6 unemployment: +0.1 to 7.9% – Household Survey
Nonfarm Payroll Change by Sector
Government and Health Services are related to the surge of illegal immigrants and the need to address them.
Monthly Change in Nonfarm Payrolls
Monthly Revisions
- The change in total nonfarm payroll employment for June was revised down by 61,000, from +179,000 to +118,000.
- The change for July was revised down by 25,000, from +114,000 to +89,000.
- With these revisions, employment in June and July combined is 86,000 lower than previously reported.
Nearly every month there are negative revisions. I will report on this separately, in detail.
Part-Time Jobs
- Involuntary Part-Time Work: +246,000 to 4,830,000
- Voluntary Part-Time Work: +246,000 to 22,561,000
- Total Full-Time Work: -438,000 to 133,246,000
- Total Part-Time Work: +527,000 to 28,256,000
- Multiple Job Holders: +65,000 to 8,538,000
The above numbers never total correctly due to the way the BLS makes seasonal adjustments. I list them as reported.
It’s important to not that multiple jobs are additive to nonfarm payrolls but not the number of employed.
Hours and Wages
This data is frequently revised.
- Average weekly hours of all private employees rose 0.1 hour to 34.3 hours.
- Average weekly hours of all private service-providing employees was flat at 33.2 hours.
- Average weekly hours of manufacturers rose 0.1 hours to 40.0 hours.
An overall decline or rise of a tenth of an hour does not sound line much, but with employment over 160 million, it’s more significant than it appears at first glance.
The decline in manufacturing jobs is instructive. Jobs dropped by 24,000 but hours ticked for those still working.
Hourly Earnings
This data is also frequently revised. Here are the numbers as reported this month.
Average Hourly Earnings of All Nonfarm Workers rose $0.14 to $35.21. A year ago the average wage was $33.91. That’s a gain of 3.8%.
Average hourly earnings of Production and Nonsupervisory Workers rose $0.11 to $30.27. A year ago the average wage was $29.09. That’s a gain of 4.1%.
Year-over-year wages are keeping up with year-over-year inflation after underperforming for many months. However, year-over-year gains are falling fast.
Unemployment Rate
The unemployment rate hit a 50-year low in January and April of 2023 at 3.4 percent. It’s now 4.2percent.
“The unemployment rate has bottomed this cycle and will generally head higher.”
I first made that comment many months ago. If there was any doubt, it’s now erased.
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 4.2 percent.
- U-6 is much higher at 7.9 percent.
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.
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.
Birth-Death Methodology Explained
I gave a detailed explanation of the model and why the hype is wrong in my June 8, 2024 post How Much Did the BLS Birth-Death Adjustment Pad the May Jobs Report?
I repeat, do not subtract the birth-death number from the headline number. That’s flawed.
However, it is now clear that the BLS is too optimistic about the number of jobs they believe are being created by the net creation of new businesses.
A Breakdown, by Sector, of the Negative 818,000 BLS Job Revisions
On August 22, 2024 I gave A Breakdown, by Sector, of the Negative 818,000 BLS Job Revisions
Those negative revisions are a direct result of the BLS Birth-Death model gone haywire.
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.
Recent Economic Data
September 3: Construction Spending Growth Slows in May, Stops in June, Negative in July
September 5: Small Businesses Reducing Workers for the Last Four Months
September 5: Fed Beige Book Shows Flat or Declining Economy in 9 of 12 Fed Districts
I am amused by people who still think the economy is not headed for recession when the data suggests we are in recession already.
Given that a many jobs in health care are social assistance are government jobs, how many more government jobs are being created than what is in the government jobs category?
I couldn’t find any information on that other than a notable number of health care jobs are government and a significant portion of social assistance jobs are government.
I’d be interested in knowing how many of these jobs are more government jobs.
We already know that the enormous influx of immigrants have been flooding hospitals and social assistance offices which is why so many jobs are created in these to industries.
Thanks, Mish, for stressing the growth of government and health care jobs as the leaders of job growth, AND THE REASON WHY THEY WERE THE LEADERS! These types of jobs do nothing for GDP.
Might as well put in Leisure and Hospitality into that group also. The affluent want to be served and that is why the ‘migrant surge’ was allowed to happen.
I feel broker and broker every day.
I would hardly characterize this as a “very poor report”. A very poor report would entail numbers much closer to zero, if not negative.
It was an OK report. Definitely much softer than say what we saw a year ago, but certainly not indicative of the economy currently being in a recession.
you have your definition – I have mine
But employment growth is often positive at the start of recessions.
Revisions are consistently negative.
This report was NOT OK
and you are not remotely tuned into lags, revisions, or recession models
It’s true that employment is often positive at the start of recessions but at some point unemployment always shoots up almost vertically. However, this positive lag time is usually very short… just a few months at the most. Seems to me you been asserting that we’re in recession for longer than the typical timespan. This is where you and I differ.
“But employment growth is often positive at the start of recessions.”
Wait, I though you said the recession started month ago?
Which is it? Just starting or 6 months?
One trillion dollars of new debt … every hundred days
Repeat that till it sinks in
Keep in mind… many thousands of those ‘job openings’ … were created … by folks who dropped dead or were maimed… by the Pfizer Injections.
Those should be subtracted from the report
This is a Joke . . . considering it will be revised downward next month . . . We have now reached the point where lies are truths and truths are lies . . .
Agreed. Way too many revisions. May as well skip the current month’s stats, and just wait 4 weeks to release the ‘real’ numbers. This revision crap is ridiculous. When you see continuously see major revisions to the previous month’s numbers, you have to conclude that the data collection process is extremely flawed.
When the situation is really bad – you have to lie. JC Juncker
Best indicator of recession is all the falling commodity prices. Oil now at lowest price in 3 years.
Food at the highest prices in 3 years.
not at the commodity level – wheat & corn near 3 year lows
There will be some bumps in the unemployment numbers as the economy enters a recession. 2-3 years ago companies were hiring just to keep talent from working for their competitors.
Equities which have been Bulled thinking Fed was about to aggressively cut are selling.
Although private jobs are weak, government spending remains Brisk.
Fed from a Macro view will not be differentiating these two aspects. This in their Jackson Hole announced return weighting focus on employment
Now it is up to CPI as last excuse to allow Fed to cut by 50 basis.
Otherwise Fed will continue to follow markets rather then lead rates down
Although am believer that Powell wants to cut a bunch, as that would be election interference without some strong reason to do so, he can not. Would imperil Fed in a second Trump administration.
Trump announced that with his second term would come an Audit of Federal Government chaired by Musk.
Powell would not want Fed Reserve swept up in that, so he will keep Feds nose clean.
I am of mind Trump announcement was aimed at Fed as much as at Washington DC.
So based on the Monthly Change in Nonfarm Payrolls chart, there was a big drop annually from 2022 to 2023. Then another drop from 2023 through YTD 2024 but not as big. Granted, the monthly employment numbers in 2-3 months “could” drop towards zero or go negative. The operative work here is could, which brings me to my final point.
The Unemployment Seasonably Adjusted chart clearly shows the current rise in unemployment curve is clearly elongated compared to 2008 and very much so compared to 2001.
Why is this? It’s very simple. $2T in deficit spending this FY is extending out by a significant margin the amount of time that it’s going to take the NBER to declare a recession. There’s no way the NBER comes back and says that a recession started prior to the upcoming Q1 of FY 2025.
Mike (Mish),
I don’t disagree with you, but I don’t follow in what points you to the ‘fact’ that we’re currently in a recession?
While jobs are deteriorating, artificially supported by government jobs; declining oil prices, I don’t see how we can call a recession.
Retail sales are up (although on credit, inflated with inflation), company earnings were meehh, gold up, dollar down, 10 yr down, wages positive, CPI/PPI/PCE trending down, foreclosures, defaults, bankruptcies, etc are below pre-covid,
I don’t know, and would love some color into what I’m missing on the horizon.
TIA
Jim
I have discussed this 3 time before. But I am doing another report now. Watch my next post.
Jim, the US is NOT in a recession, at least not one that the NBER is going to call. The employment numbers over the horizon may very well usher in a recession, but through today, we’re not in a recession.
How do you know?
Do you know what the rest of the quarter is.
Ok you are guessing one way but history is definitely on my side.
The rest of the quarter is 3 weeks, Mish. GDP is not going to collapse between now and the end of the month. It’s just NOT!
The most recent real recession, 2008, is not on your side either. As I posted the other day, the Fed cut 50 BP in Sept 2007 and the NBER said the recession started in Dec, 3 months later.
Could the NBER declare recession sometime in Q1 FY2025? Sure! But I would give it maybe 50/50 and then goes up in 2025.
The ONLY thing that’s really pointing towards a potential recession is manufacturing, but that’s been below 50 since Nov 2022.
142K jobs is not a BAD month.
And without the trillion of new debt every 100 days and the mostly govt jobs (recall in Commie Russia everyone had a job haha)…
What does this look like?
These stats do not indicate we’re in a recession. We may be heading towards one but we’re not there yet,
Totally agree. Danielle DiMartino Booth, for example, has been saying we’ve been in a recession since late last year which is just utterly ridiculous.
It’s OVAH
Now, I assume the “plan” is to make economic data appear as negative as possible in hopes to encouraging the fed to reduce interest rates faster and much lower.
I don’t think the Democratic administration is on board with that plan since it would also paint them in a very negative light just 2 months from the election.
Sorry – What silliness
Why would Biden-Harris want terrible jobs reports
You thinking is ass backward
If anything they are padding govt jobs
Yes, then VERY QUICKLY, if the Biden Regime stays, they will revise everything upward to make Vitamin K just A-OH-K!
Bias depends on the stakeholders.
Clearly, Wall Street is in dependency mode–and needs reduced interest rates asap to increase their bonuses. While they use economic data, they do NOT create much of it for public consumption.
The bigger stakeholders are government employees, who are beginning to worry that Trump wins. One thing Trump could do to reduce the ‘deep state’ and to help the economy is reduce Fed employment. However, it would be foolish to announce this in advance. The result–overly optimistic reports with adjustments later.
We need another round of Covid… to provide cover for one last massive blast of stimulus….
Then the extermination can begin