June Employment Surpasses Estimates

By Thomas Cooley and Peter Rupert

The BLS announced that total nonfarm employment increased by 213,000 in June with 202,000 of that from the private sector. Early forecasts were in the 195k range. In addition, April employment was revised up 16,000 and May 21,000. The only large decline occurred in retail trade, shedding 21,600 jobs. Since January, 2008, employment is about 9% higher and services has increased about 12%. Construction employment losses after 2008 were large and is now nearly back to the 2008 level. empchgm-2018-07-10

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Average hours of work remained at 34.5 and average hourly earnings increased from $26.93 in May to $26.98 in June and up 2.74% since June of last year. In real terms, using the CPI, wages have not risen over the previous year as the CPI also increased about 2.7% since June of 2017.

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The household survey showed that the employment to population ratio remained at 60.4, the labor force participation rate increased from 62.7 to 62.9, and the unemployment rate rose slightly to 4.05%.

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The BLS also announced the newest Job Opening and Labor Turnover Survey, showing the level of vacancies fell slightly, from a revised 6.8 million to 6.6 million. Moreover, in nearly all regions the number of vacancies is about the same as the number of unemployed persons…although in the Midwest there are 326,000 more vacancies than unemployed persons.

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Employment Report and GDP

By Thomas Cooley and Peter Rupert

The BEA’s 2nd estimate of Q1 GDP shaved off 0.1 percentage points to a now revised growth rate of 2.2% at a seasonally adjusted annualized rate.  Personal consumption expenditures were quite weak, revised down from 1.1% to 1.0% , the lowest reading since 2013 Q2. The change also resulted from downward revisions to private inventory investment, residential fixed investment (revised from 0.0% to -2.0%), and exports, but partly offset by an upward revision to non-residential fixed investment (from 6.1% to 9.2%).

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May Employment Report

Today’s employment report from the BLS revealed continued strength in the labor market with an increase of 223,000 jobs, of which 218,000  were in the private sector. The only significant declines were found in motor vehicles and parts, down 4,400 and temporary help services, down 7,800.

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Average weekly hours remained at 34.5 for the fourth month in a row. Average hourly pay increased from $26.84 to $26.92.

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The household survey also showed continued strength with the number of unemployed persons falling by 281,000 leading to a further decline in the unemployment rate from 3.93% to 3.75%…the lowest since 1969!

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The week ended on a high note with both the GDP and employment reports showing continued strength. Have a nice weekend!

Employment and GDP

 

By Thomas Cooley and Peter Rupert

The BLS release showed 164,000 new jobs, with 168,000 added in the private sector in April and the government sector declining by 4,000. Service sector jobs increased 119,000 and goods producing jobs increased 49,000. The mining and logging sector has had non-negative growth for the past year and a half after experiencing twenty five consecutive months of decline. Average hours of work remained at 34.5 and hourly earnings ticked up slightly, from $26.80 to $26.84.

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The household data revealed a 3.93% unemployment rate,  down from 4.07%, and is now the lowest rate the economy has seen in nearly two decades. The number of people in the labor force fell by 236,000 and the participation rate was down 0.1%.  The continued improvement in the labor market, jobs and wages, will bring some added pressure to the FOMC to raise rates, given the “no change” verdict from the May 1-2 meeting:

Information received since the Federal Open Market Committee met in March indicates that the labor market has continued to strengthen and that economic activity has been rising at a moderate rate. Job gains have been strong, on average, in recent months, and the unemployment rate has stayed low.

Vacancies and Unemployment

Economists often refer to a “tight” labor market as one in which there are relatively many job openings (vacancies) compared to the number of unemployed persons searching. The latest data from JOLTS  show that the number of vacancies was 6,052,000 in February and the number of unemployed job searchers was 6,585,000 in March, that is 1.09 openings per unemployed. The number of job openings is the highest ever recorded since the BLS began the series in December, 2000.

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The BLS also reports job openings by industry. The most job vacancies are in Education and Health Services with 1,173,000 openings with 1,101,000 in Health Care and Social Services. The next highest was in Trade, Transportation and Utilities, 1,148,000, with 708,000 in retail trade.

The four graphs below show the levels of vacancies and the number of unemployed for the four census regions.

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The Midwest labor market is extremely tight, with roughly 110,000 more vacancies than unemployed searchers. It is the only census region with more vacancies than unemployed; although the other regions appear to have tight labor markets as well. The only other place where that has happened since the JOLTS series began was in the Northeast in 2001, with 10,000 more vacancies than unemployed.

GDP

The BEA announced that real GDP grew at a 2.3% clip in the advance estimate for 2018Q1 and 2017Q4 was revised up to 2.9%. Consumption grew at a 1.1% pace after growing 4.0% in Q4. This is the slowest growth for real PCE since 2013. In spite of the strong growth and labor market, the consumer is not providing much of the fuel for the expansion.

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