Friday, June 06, 2008
Employment Release - Reality Shows Up
The number of unemployed persons increased by 861,000 to 8.5 million in May, after seasonal adjustment, and the unemployment rate rose by 0.5 percentage point to 5.5 percent. A year earlier, the number of unemployed persons was 6.9 million, and the jobless rate was 4.5 percent. (See table A-1.)One interesting aspect of the household survey numbers are that the "not-in-workforce" number dropped 369,000. This may be due to financial pressures, but it is probably a major factor producing the sharp jump in unemployed individuals. Employed persons dropped 285,000, which certainly does not look good. One factor in this rise may be the continuing decline in building. Because of the way employment is reckoned, a person who had worked one day in the period would have been counted "employed". So a relatively minor drop in building activity can produce a surprisingly high rise in unemployed persons in the household survey.
The establishment survey showed a net loss of 49,000 jobs. Retail trade lost 27,000 jobs. These numbers are probably overoptimistic because of lagging adjustments in the Birth/Death model.
If you look at Table A-1, you will see that the SA participation rate rose .3 (65.9% to 66.2%) from February to May, which accounts for a considerable amount of this seemingly sudden rise in unemployment. The participation rate is also up .2 on a YoY basis.
The participation rate for women rose .4 from February. I feel safe in attributing most of this increase to high inflation, gaps in household budgets, and attempts by workers to fill those gaps. Some of this is probably due to unemployment benefits expiring and the realization that the disruption in real estate or autos is extending too long to wait for the return of "normalcy".
Regardless, this will be a shock to a lot of economists who have been denying a recession. There is one.
If you look at Table A-9, you will see that on an NSA basis, the number of people who had been unemployed 15-26 weeks dropped by 210,000, while the number of people unemployed for 27 weeks and over only rose by 118,000. Therefore people are taking what they can get when their benefits run out. Another way to look at this is that NSA median duration of unemployment in weeks dropped, in one month, from 11.0 to 8.2, and on an SA basis it dropped from 9.3 to 8.3. So recent layoffs are adding unemployed people, and others who were not officially unemployed are back in the officially unemployed lists, while others are back at work.
I believe that if you truly want and try to find a good job, you just will.
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