Friday, June 04, 2010
Black Friday Employment Report
The html report is here. CR will have excellent analysis today. Headline:
Total nonfarm payroll employment grew by 431,000 in May, reflecting the hiring of 411,000 temporary employees to work on Census 2010, the U.S. Bureau of Labor Statistics reported today. Private-sector employment changed little (+41,000). Manufacturing, temporary help services, and mining added jobs, while construction employment declined. The unemployment rate edged down to 9.7 percent.This is way worse than expectation.
Let's start with Table A - the household survey:
The number of total employed dropped by 35,000? Huh? The unemployment rate would have risen, but persons not in the labor force grew by 493,000, overshadowing the total increase in population of 170,000.
Last month there was a huge jump in participation, and that is making this month's figures look a bit funny. If you compare May to March:
- The participation rate has risen from 64.9 to 65.
- The number employed has increased by 515,000.
But surely Table B - the establishment survey - looks better? Total goods-producing employees rose by only 4K, although there was a 9.3K rise in auto employment, overshadowed by a 35K decrease in construction. Which may in fact be NY state's budget problems, so I am mentally offsetting the big construction drop a bit. Service-providing employment grew by 37K. Government employment grew by 390K (Census). This implies that the underlying trend is a drop in government employment.
Because the methodology is different for the two surveys, you will get different numbers.
Turning to the employment by class table A-8:
Non-ag wage and salary employment using the seasonally adjusted figures:
Total wage and salary employment grew by only 14K. Of which, private employees added 200K jobs and government dropped 170K. The census jobs should not be affecting the seasonally-adjusted numbers. Self-employed workers grew by 42K.
We see that the number working part-time for economic purposes continues to drop, which is a big help.
Since March (again, using SA numbers)
The number of self-employed has risen by 960K.
The number working part-time due to slack work has dropped by 34K, and
The number working part-time due to inability to find full-time work has dropped by 62K.
So the picture is consistent - the economy and level of employment slowly improves, but most of the change is really in self-employed. The reason I concentrate on the household survey is that the establishment survey is going to be misleading at times like these. For one thing, it is not going to pick up the casual labor/self-employed jump.
The bottom line is that the economy is not growing fast enough to generate enough jobs to really cut the employment rate. But we're old. And getting older every year. So we're retiring, which makes things look better.
Going back to Table A - the household survey, we note that since May 2009, the civilian labor force has dropped by over 560K. It is only the retirements which are saving us from really ugly unemployment numbers, because since May 2009, the number of employed persons has dropped by over a million.
The economy is now much weaker than it was in the wake of the 1982 recession. As in 1983-84, self-employment is generating more in the way of employment than anything else. It might be time to adopt a highly small-business friendly policy!
And boy, does this report suck for bankers. You try lending to someone scratching a living, and you'll go bust quickly. Not a lot of community banker bling here. Your stable income sources (gov jobs) are going bust, and your unstable sources are growing.
PS: Between the worries over European banks (they can't afford to raise capitalization), European sovereign debt problems, and this report, Treasuries are going to be given a hefty boost.
PPS: I still claim that my forecast for continued US growth holds, although it is very slow growth. Look at the crude inventories report - the four week average for distillate (diesel and heating fuel) is way up YoY. 17.1%. And yes, some is being forward bought, but jet fuel is up too - 6.1%. Things are slowly easing. However inventories are so very high that crude pricing still appears 10% over. However I think today's news will induce some caution there.
competition, then free trade is a problem. When
China pegs to the dollar free trade is a problem.
Why people would rather pay more in taxes to fund
the welfare state than to pay more for the stuff they
buy is beyond me. You cN control your consumption
but not the welfare state you are taxed to support.
There is no free lunch with free trade.
Income tax (plus cap gains tax and dividend tax), free trade, high employment.
Pick any two.
But... but... I'm an American! I'm "entitled" to more than just two out of three.
I deserve this. Here's to the future! ;)
Does your analysis of slow growth going forward include the tax increase starting Jan. 1 2011?
Aurthur Laffer has an article in the WSJ pointing out that some portion of this year's business profits is likely to be due to income-shifting into 2010 from the out-years, including lots of one-time events like realized cap gains. (He might be over-stating the claim, as he doesn't back it up with data, but he's got a good point.) I'm sure there's lots of this going on with personal income.
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