Monday, March 12, 2018

February Employment Report: Prime Participation and Diffusion Indexes

by Calculated Risk on 3/12/2018 01:12:00 PM

Two more graphs based on the February employment report ...

The BLS diffusion index for total private employment was at 68.6 in February, up from 58.9 in January.

For manufacturing, the diffusion index was at 69.1, up from 59.2 in January.

Employment Diffusion IndexClick on graph for larger image.

Think of this as a measure of how widespread job gains are across industries. The further from 50 (above or below), the more widespread the job losses or gains reported by the BLS.  Above 60 is very good.  From the BLS:

Figures are the percent of industries with employment increasing plus one-half of the industries with unchanged employment, where 50 percent indicates an equal balance between industries with increasing and decreasing employment.
Overall both total private and manufacturing job growth was widespread in February.

The second graph shows the employment-population ratio and participation rate for those 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 February at 82.2%, and the 25 to 54 employment population ratio increased to 79.3%.

The participation rate has been trending down for this group since the late '90s, however, with more younger workers (and fewer 50+ age workers), the prime participation rate might move up some more.