Friday, May 08, 2015

Employment Report Comments and Graphs

by Bill McBride on 5/08/2015 11:52:00 AM

Earlier: April Employment Report: 223,000 Jobs, 5.4% Unemployment Rate

This was a decent employment report with 223,000 jobs added, but February and March were revised down by a combined 39,000 jobs.

However there is still limited wage growth, from the BLS: "In April, average hourly earnings for all employees on private nonfarm payrolls rose by 3 cents to $24.87. Over the past 12 months, average hourly earnings have increased by 2.2 percent." Weekly hours were unchanged.

A few more numbers:  Total employment increased 223,000 from March to April and is now 3.0 million above the previous peak.  Total employment is up 11.7 million from the employment recession low.

Private payroll employment increased 213,000 from March to April, and private employment is now 3.5 million above the previous peak. Private employment is up 12.3 million from the recession low.

In April, the year-over-year change was just under 3.0 million jobs.

Overall this is another positive month ... and moving in the right direction!

Employment-Population Ratio, 25 to 54 years old

Employment Population Ratio, 25 to 54Since the overall participation rate declined recently due to cyclical (recession) and demographic (aging population, younger people staying in school) 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 participation rate for this group was trending up as women joined the labor force. Since the early '90s, the participation rate moved more sideways, with a downward drift starting around '00 - and with ups and downs related to the business cycle.

The 25 to 54 participation rate increased in April to 81.0%, and the 25 to 54 employment population ratio was unchanged at 77.2%.  As the recovery continues, I expect the participation rate for this group to increase a little more (or at least stabilize for a couple of years) - although the participation rate has been trending down for this group since the late '90s.

Average Hourly Earnings

Wages CES, Nominal and RealThis graph is based on “Average Hourly Earnings” from the Current Employment Statistics (CES) (aka "Establishment") monthly employment report. Note: There are also two quarterly sources for earnings data: 1) “Hourly Compensation,” from the BLS’s Productivity and Costs; and 2) the Employment Cost Index which includes wage/salary and benefit compensation.

The blue line shows the nominal year-over-year change in "Average Hourly Earnings" for all private employees.  Nominal wage growth increased slightly to 2.2%, however wages were revised down for February and March.  Wages will probably pick up a little this year.

Note: CPI has been running under 2%, so there has been some real wage growth.

Part Time for Economic Reasons

Part Time WorkersFrom the BLS report:

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was little changed at 6.6 million in April, but is down by 880,000 from a year earlier. These individuals, who would have preferred full-time employment, 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 persons working part time for economic reasons decreased in April to 6.58 million from 6.70 million in March.  This suggests slack still in the labor market.  These workers are included in the alternate measure of labor underutilization (U-6) that decreased to 10.8% in April from 10.9% in March. This is the lowest level for U-6 since August 2008.

Unemployed over 26 Weeks

Unemployed Over 26 Weeks This graph shows the number of workers unemployed for 27 weeks or more.

According to the BLS, there are 2.525 million workers who have been unemployed for more than 26 weeks and still want a job. This was down from 2.563 million in March.

This is trending down - and is at the lowest level since November 2008 - but is still very high.

State and Local Government

State and Local GovernmentThis graph shows total state and government payroll employment since January 2007. State and local governments had lost jobs for four straight years. (Note: Scale doesn't start at zero to better show the change.)

In April 2015, state and local governments added 8,000 jobs (after losing 8,000 in March). State and local government employment is now up 132,000 from the bottom, but still 626,000 below the peak.

State and local employment is now generally increasing - slowly.  And Federal government layoffs have slowed (Federal payrolls added 2,000 jobs in April, and Federal employment is unchanged year-to-date).

This was a decent employment report for April (not great, but not terrible).  The year-over-year employment gains are still solid.