by Bill McBride on 8/03/2012 10:21:00 AM
Friday, August 03, 2012
The economy has added 1.06 million jobs over the first seven months of the year (1.12 million private sector jobs). At this pace, the economy would add around 1.9 million private sector jobs in 2012; less than the 2.1 million added in 2011. Also, at this pace of payroll job growth, the unemployment rate will probably still be above 8% at the end of the year.
Some numbers: There were 163,000 payroll jobs added in July, with 172,000 private sector jobs added, and 9,000 government jobs lost. The unemployment rate increased slightly to 8.3% (from the household survey), and the participation rate declined to 63.7%. Both are moving in the wrong direction.
U-6, an alternate measure of labor underutilization that includes part time workers and marginally attached workers, increased so 15.0%.
The change in May payroll employment was revised up from +77,000 to +87,000, but June was revised down from +80,000 to +64,000.
The average workweek was unchanged at 34.5 hours, and average hourly earnings increased slightly. "The average workweek for all employees on private nonfarm payrolls was unchanged at 34.5 hours in July. ... In July, average hourly earnings for all employees on private nonfarm payrolls edged up by 2 cents to $23.52. Over the year, average hourly earnings rose by 1.7 percent." This is sluggish earnings growth.
There are a total of 12.8 million Americans unemployed and 5.2 million have been unemployed for more than 6 months.
Even though the number of payroll jobs added was more than expected, the bottom line is this was another fairly weak employment report. Here are a few more graph ...
Employment-Population Ratio, 25 to 54 years old
Click on graph for larger image.
Since the participation rate has declined recently due to cyclical (recession) and demographic (aging population) reasons, an important graph is the employment-population ratio for the key working age group: 25 to 54 years old.
In the earlier period the employment-population ratio for this group was trending up as women joined the labor force. The ratio has been mostly moving sideways since the early '90s, with ups and downs related to the business cycle.
This ratio should probably move back to or above 80% as the economy recovers. So far the ratio has only increased slightly from a low of 74.7% to 75.5% in July (this was down slightly in July.)
Percent Job Losses During Recessions
This graph shows the job losses from the start of the employment recession, in percentage terms - this time aligned at maximum job losses.
In the earlier post, the graph showed the job losses aligned at the start of the employment recession.
Part Time for Economic Reasons
From the BLS report:
The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was essentially unchanged at 8.2 million in July. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job.The number of part time workers increased slightly in July to 8.25 millon.
These workers are included in the alternate measure of labor underutilization (U-6) that increased in July to 15.0%, up from 14.9% in June.
Unemployed over 26 Weeks
This graph shows the number of workers unemployed for 27 weeks or more.
According to the BLS, there are 5.19 million workers who have been unemployed for more than 26 weeks and still want a job. This was down from 5.37 million in June. This is generally trending down, but very slowly. Long term unemployment remains one of the key labor problems in the US.
State and Local Government
So far in 2012 - through July - state and local government have lost 42,000 jobs (7,000 jobs were added in July). In the first seven months of 2011, state and local governments lost 205,000 payroll jobs - and 230,000 for the year. So the layoffs have slowed.
This graph shows total state and government payroll employment since January 2007. State and local governments lost 129,000 jobs in 2009, 262,000 in 2010, and 230,000 in 2011.
Note: Some of the stimulus spending from the American Recovery and Reinvestment Act probably kept state and local employment from declining faster in 2009.
Of course the Federal government is still losing workers (38,000 over the last 12 months and another 2,000 in July), but it looks like state and local government employment losses might be slowing - but the job losses haven't stopped yet.
Overall this was another fairly weak report.