Friday, July 05, 2019

Comments on June Employment Report

by Calculated Risk on 7/05/2019 09:41:00 AM

The headline jobs number at 224 thousand for June was above consensus expectations of 165 thousand, however the previous two months were revised down 11 thousand, combined. The unemployment rate increased to 3.7%. Overall this was a decent report. Note: Temporary Decennial Census hiring for June is not available yet (something to watch).

Earlier: June Employment Report: 224,000 Jobs Added, 3.7% Unemployment Rate

In June, the year-over-year employment change was 2.301 million jobs. That is decent year-over-year growth.

Average Hourly Earnings

Wage growth was below expectations. From the BLS:

"In June, average hourly earnings for all employees on private nonfarm payrolls rose by 6 cents to $27.90, following a 9-cent gain in May. Over the past 12 months, average hourly earnings have increased by 3.1 percent."
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 graph shows the nominal year-over-year change in "Average Hourly Earnings" for all private employees.  Nominal wage growth was at 3.1% YoY in June.

Wage growth has generally been trending up, but has weakened recently.

Prime (25 to 54 Years Old) Participation

Employment Population Ratio, 25 to 54Since the overall participation rate has declined 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 June to 82.2% from 82.1% in May, and the 25 to 54 employment population ratio was unchanged at 79.7%.

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 essentially unchanged at 4.3 million in June. These individuals, who would have preferred full-time employment, were working part time because their hours had been reduced or they were unable to find full-time jobs. "
The number of persons working part time for economic reasons decreased in June to 4.347 million from 4.355 million in May.   The number of persons working part time for economic reason has been generally trending down.

These workers are included in the alternate measure of labor underutilization (U-6) that increased to 7.2% in June.

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 1.414 million workers who have been unemployed for more than 26 weeks and still want a job. This was up from 1.298 million in May.

Summary:

The headline jobs number was above expectations, however the previous two months were revised down slightly.  The headline unemployment rate increase to 3.7%.

Wage growth was a little disappointing.

Overall this was a decent jobs report.   The economy added 1,033 thousand jobs through June 2019, down from 1,411 thousand jobs during the first half of 2018.   So job growth has slowed.