by: Zach Bethune, Thomas Cooley, Peter Rupert
The establishment survey reports total non-farm employment increased 288,000 and the previous two months were also revised up a total of 36,000 over what was previously reported. Job growth over the year has averaged 190,000 per month. Moreover, the job gains were fairly widespread with service producing jobs leading the way with 220,000 jobs added. Goods producing and government employment showed little change.
The unemployment rate fell from 6.7% to 6.3%.
Some cold water on the report
But is the report really as good as it looks at first blush? Maybe not…average weekly hours of work were unchanged at 34.5 and average hourly and weekly earnings remained flat at $24.31 and $838.70, respectively.
According to the household survey the labor force fell by 806,000 and the labor force participation rate declined from 63.2 to 62.8. Is this decline in the labor force participation rate (and the consequent decline in the unemployment rate) due to discouraged searchers leaving the labor market? Or, is it a longer run trend down in participation rates? According to the household survey employment fell by 73,000.
Some of the decline in labor force participation is attributed to the fact that the long duration unemployed have dropped out of the labor force. The average duration of unemployment is little changed at 35 weeks and more than 35% of the unemployed are unemployed for 27 weeks or more. Many of the long duration unemployed eventually stop looking for work and thus drop out of the labor force. This has been an important contributor to the declines in labor force participation.
As often happens, it is possible to use this report to signal strong growth in the labor market or to underscore the real weaknesses in the economy. The takeaway is that the labor market still appears fragile.