by Bill McBride on 9/04/2015 09:55:00 AM
Friday, September 04, 2015
Earlier: August Employment Report: 173,000 Jobs, 5.1% Unemployment Rate
This was a decent employment report with 173,000 jobs added, and employment gains for June and July were revised up.
There was even some wage growth, from the BLS: "In August, average hourly earnings for all employees on private nonfarm payrolls rose by 8 cents to $25.09, following a 6-cent gain in July. Hourly earnings have risen by 2.2 percent over the year."
A few more numbers: Total employment increased 173,000 from July to August and is now 3.9 million above the previous peak. Total employment is up 12.6 million from the employment recession low.
Private payroll employment increased 140,000 from July to August, and private employment is now 4.3 million above the previous peak. Private employment is up 13.1 million from the recession low.
In August, the year-over-year change was just over 2.9 million jobs.
Note: My view, partially based on demographics, has been that the unemployment rate could fall below 5% without a significant pickup in inflation. With the unemployment rate now at 5.1% - and still little inflation - this view appears to be correct (as opposed to those arguing, a year or two ago, that inflation would pick up at 6%).
Overall this was a decent report.
Employment-Population Ratio, 25 to 54 years old
Since the overall participation rate declined recently due to cyclical (recession) and demographic (aging population, younger people staying in school) reasons, here 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 was unchanged in August at 80.7%, and the 25 to 54 employment population ratio increased to 77.2%. The participation rate for this group might 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
This 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 graph shows the nominal year-over-year change in "Average Hourly Earnings" for all private employees. Nominal wage growth increased 2.1% YoY - and although the series is noisy - it does appear wage growth is trending up a little. Wages will probably pick up a little more this year.
Note: CPI has been running under 2%, so there has been some real wage growth.
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 little changed in August at 6.5 million. 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 increased in August to 6.48 million from 6.32 million from in July. This suggests slack still in the labor market.
These workers are included in the alternate measure of labor underutilization (U-6) that declined to 10.3% in August (lowest level since June 2008).
Unemployed over 26 Weeks
This graph shows the number of workers unemployed for 27 weeks or more.
According to the BLS, there are 2.19 million workers who have been unemployed for more than 26 weeks and still want a job. This was up slightly from 2.18 million in July.
This is generally trending down, but is still high.
State and Local Government
This graph shows total state and government payroll employment since January 2007. (Note: Scale doesn't start at zero to better show the change.)
In August 2015, state and local governments added 31 thousand jobs. State and local government employment is now up 214,000 from the bottom, but still 544,000 below the peak.
State and local employment is now increasing. And Federal government layoffs appear to have ended (Federal payrolls were unchanged in July, and Federal employment is up 6,000 year-to-date).
Overall this was a decent employment report for August and indicates further improvement in the labor market.