Initial Reaction
Today’s employment report shows an amazing increase of 287,000 jobs. The BLS revised last month from 38,000 down to 11,000.
The household survey shows June employment rose by 67,000. In May, employment rose by a mere 26,000 and in April, employment declined by a whopping 316,000.
The unemployment rate rose 0.2 percentage points to 4.9% because the labor force rose by 414,000.
We have seen divergences between the household survey and the establishment survey before, but not three consecutive months, recently.
Let’s dive into the details in the BLS Employment Situation Summary, unofficially called the Jobs Report.
BLS Jobs Statistics at a Glance
- Nonfarm Payroll: +287,000 – Establishment Survey
- Employment: +67,000 – Household Survey
- Unemployment: +347,000 – Household Survey
- Involuntary Part-Time Work: -587,000 – Household Survey
- Voluntary Part-Time Work: -101,000 – Household Survey
- Baseline Unemployment Rate: +0.2 to 4.9% – Household Survey
- U-6 unemployment: +0.0 to 9.7% – Household Survey
- Civilian Non-institutional Population: +223,000
- Civilian Labor Force: +414,000 – Household Survey
- Not in Labor Force: -191,000 – Household Survey
- Participation Rate: +0.1 to 62.7 – Household Survey
Employment Report Statement
Total nonfarm payroll employment increased by 287,000 in June, and the unemployment
rate rose to 4.9 percent, the U.S. Bureau of Labor Statistics reported today. Job
growth occurred in leisure and hospitality, health care and social assistance, and
financial activities. Employment also increased in information, mostly reflecting
the return of workers from a strike.
Unemployment Rate – Seasonally Adjusted
Nonfarm Employment Change from Previous Month
Nonfarm Employment Change from Previous Month by Job Type
Hours and Wages
Average weekly hours of all private employees was flat at 34.4 hours. Average weekly hours of all private service-providing employees was flat at 33.3 hours. Average weekly hours of manufacturers was flat at 40.7 hours.
Average hourly earnings of private workers rose $0.04 to $21.51. Average hourly earnings of private service-providing employees rose $0.03 to $21.29. Average hourly earnings of manufacturers fell $0.02 to $20.39.
For discussion of income distribution, please see What’s “Really” Behind Gross Inequalities In Income Distribution?
Birth Death Model
Starting January 2014, I dropped the Birth/Death Model charts from this report. 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. Should anything interesting arise in the Birth/Death numbers, I will add the charts back.
Table 15 BLS Alternate Measures of Unemployment
Table A-15 is where one can find a better approximation of what the unemployment rate really is.
Notice I said “better” approximation not to be confused with “good” approximation.
The official unemployment rate is 4.9%. However, if you start counting all the people who want a job but gave up, all the people with part-time jobs that want a full-time job, all the people who dropped off the unemployment rolls because their unemployment benefits ran out, etc., you get a closer picture of what the unemployment rate is. That number is in the last row labeled U-6.
U-6 is much higher at 9.6%. 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. The rest is disability fraud, forced retirement, discouraged workers, and kids moving back home because they cannot find a job.
Strength is Relative
It’s important to put the jobs numbers into proper perspective.
- In the household survey, if you work as little as 1 hour a week, even selling trinkets on EBay, you are considered employed.
- In the household survey, if you work three part-time jobs, 12 hours each, the BLS considers you a full-time employee.
- In the payroll survey, three part-time jobs count as three jobs. The BLS attempts to factor this in, but they do not weed out duplicate Social Security numbers. The potential for double-counting jobs in the payroll survey is large.
Household Survey vs. Payroll Survey
The payroll survey (sometimes called the establishment survey) is the headline jobs number, generally released the first Friday of every month. It is based on employer reporting.
The household survey is a phone survey conducted by the BLS. It measures unemployment and many 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 jobs on Monster 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.
Final Thoughts
Two months ago I stated One of these times, out of the blue, we will see sustained weakness.”
Although the establishment survey rebounded sharply, for the third month the household survey was weak.
The three month change in household survey employment is -223,000. Which numbers are more believable?
Mike “Mish” Shedlock
As with unemployment, elections and interest rates these are all surveys with no actual hard data to interpret but a “spin machine” in order to exclaim and declaim…some of which pays good money apparently…but nothing like mass murder “so defined.” Behind all great bubbles are the greatest crimes in History…and nothing says criminal more than “i got away with it.” Sad world we live in when massacring the Dallas Police Force is still good for 500 points on the Dow.
Guess we’ll have to kill more just to keep this baby rolling.
Just remember..its all about teamwork.
with all this hysteria and all these incidents that the media is exploiting for their own ratings and profit the US economy doing pretty well. H2 2016 GDP should average around 3%, consumer spending still pretty solid.. multi family apartments are going up all over the Boston area where the rent starts at over $2200 or so for a 700 square foot 1 bedroom that are 100% rented
And the market moves quickly upward. Wondering why most traders take the spoon fed data for face value. And does it really matter…..that is, cheer anything that appears to be good because in order for the market to drop there needs to be a big event and even then the gov. It seems will step in. Rumors around town calling it a Free market. On a positive note, didn’t the peak in 2008 occur around this time in July?
“Traders” know that the Fed and government will keep the artificial tide rising, until their pumps run out of fuel (aka productive people’s value add, ripe for redistribution by debasement) or the levies burst. So, while it is certainly possible for a boat to sink during a rising tide, odds favor those who bet on their boat rising.
The bond market not buying “it”.
so how exactly is this report “anemic”?? 287,000 (with all the increase in Full time employment) jobs with job growth across the board ( and there is always retail at $12 an hour for those who have no skills ) where is the anemic part? there are always going to be some months where job growth is ‘less than expected’ but the overall trend has not changed. New Jobless claims have been trending LOWER not higher
BLS employment report is composed of TWO surveys.
The Establishment survey produces the jobs gained / lost number used.
The Household survey (more extensive of the two) produces the Unemployment % used.
The Household survey showed only +67K jobs.
Nick Leeds:
I can answer your question, at least my opinion. First of all, as Mish says, the data behind the numbers is suspect at best, and likely pure propaganda. Likely some months down the road it will be adjusted down but by then nobody will pay attention. In this election year with the current administration (D) look for more “positive” news to convince voters that they should stick with the current administrations policies.
And, new jobless claims trending lower are a logical result of more and more unemployment or out of workforce people. In order to collect unemployment, and thus to be considered officially unemployed, you need to work long enough to qualify. Over time if the pool of qualified workers declines, one would logically expect the amount of qualified people to decline. Of course, the optimists would just say that less people are being laid off. This might actually be true because the smaller the workforce the less people a certain percentage of terminated people represents.
I tend to ignore statistics as the data behind them is manipulated to prove or disprove whatever “they” want to say. I actually loved the academic area of statistics, but have always been taught, and have always know that you can use the same data set and manipulate it in different ways to get whatever result you desire. What I go by is the “misery index”. Not as easy to measure but here are a couple of data points for calculating the “misery index”. (1) My good friend in Houston who was let go from his job as a Manager at an Oil&Gas company almost two years ago and was 49 years old at the time. He is trying like hell to get another job, even one at CVS, or some other job not utilizing his experience and core skills, but has had no luck. (2) Myself, at 56 I was forced into IT Consulting as I couldn’t find another full time IT job (I am a Project Manager/Business Analyst). At 59 I lost my last contract job and haven’t worked since. I am 61 now and looking for work but I can’t even get an interview as the computerized filters probably throw me out before a human even looks at my resume.
I know these are two random examples, but look at the civil unrest and discord from the African American community and the poorer white community. Judging by the support for Trump and the violence and unrest we see on the news almost every day, today being a sad example, the “misery index” is high.
So, for what it is worth. That is my opinion/answer as to what is anemic in this current economy. To quote Dickens, “It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair…” For some, they are partying like 1999, for others, …..
So, good news is bad news?
Hell, if good news was good news, the Dow would be at 18k,,,oh, wait,,,it is?
Has the BLS ever considered moving to a 3 month average report in place of the messy month by month reporting they currently use?
This would seem to provide cleaner numbers and also remove the market fixation on this monthly report.
“The rest is disability fraud, forced retirement, discouraged workers, and kids moving back home because they cannot find a job.”
Not all disability is fraud.
Melt up underway…spx 2500
Recession coming up. DJIA hits 20k.