Friday, March 10, 2017

Comment: Another Solid Employment Report

by Bill McBride on 3/10/2017 10:00:00 AM

The headline jobs number was above expectations, and there were combined slight upward revisions to the previous two months. In addition wage growth picked up.  This was a solid report.

Note: The warm weather was a factor in the solid February employment report and there may be some payback in March.

Earlier: February Employment Report: 235,000 Jobs, 4.7% Unemployment Rate

In February, the year-over-year change was 2.35 million jobs. Solid job growth.

Average Hourly Earnings

Wages CES, Nominal and RealClick on graph for larger image.

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 was at 2.8% YoY in February.

Wage growth is trending up.

Employment-Population Ratio, 25 to 54 years old

Employment Population Ratio, 25 to 54Since the overall participation rate has 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 increased in January to 81.7%, and the 25 to 54 employment population ratio increase to 78.3%.

The participation rate has been trending down for this group since the late '90s, however, with more younger workers (and fewer older workers), the participation rate might move up some more.

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 5.7 million in February. 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 full-time jobs.
The number of persons working part time for economic reasons decreased in February. This level suggests a little slack still in the labor market.

These workers are included in the alternate measure of labor underutilization (U-6) that decreased to 9.2% in February.

Unemployed over 26 Weeks

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

According to the BLS, there are 1.80 million workers who have been unemployed for more than 26 weeks and still want a job. This was down from 1.85 million in January.

This was the lowest number since 2008.

This is generally trending down, but still somewhat elevated.

Overall this was another solid report.