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Friday, September 03, 2021

Comments on August Employment Report

by Calculated Risk on 9/03/2021 09:21:00 AM

The headline jobs number in the August employment report was well below expectations, however employment for the previous two months was revised up significantly.   The participation rate was unchanged and the unemployment rate decreased to 5.2%.


Leisure and hospitality was unchanged in August, probably due to the sharp increase in COVID cases.  In March and April of 2020, leisure and hospitality lost 8.2 million jobs, and are now down 1.7 million jobs since February 2020.  So leisure and hospitality has now added back almost 79% of the jobs lost in March and April 2020.

Construction employment decreased 3 thousand, and manufacturing added 37 thousand jobs.

NOTE: State and Local education lost 26 thousand jobs, seasonally adjusted, versus expectations of a solid gain.

Earlier: August Employment Report: 235 Thousand Jobs, 5.2% Unemployment Rate

In August, the year-over-year employment change was 6.041 million jobs. This turned positive in April due to the sharp jobs losses in April 2020.

Permanent Job Losers

Year-over-year change employmentClick on graph for larger image.

This graph shows permanent job losers as a percent of the pre-recession peak in employment through the report today. (ht Joe Weisenthal at Bloomberg).

This data is only available back to 1994, so there is only data for three recessions.

In August, the number of permanent job losers decreased to 2.487 million from 2.930 million in July.

These jobs will likely be the hardest to recover, so it is a positive that the number of permanent job losers is declining rapidly.

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.

The prime working age will be key as the economy recovers.

The 25 to 54 participation rate was unchanged in August at 81.8% from 81.8% in July, and the 25 to 54 employment population ratio increased to 78.0% from 77.8% in July.

Part Time for Economic Reasons

Part Time WorkersFrom the BLS report:
"In August, the number of persons employed part time for economic reasons, at 4.5 million, was essentially unchanged. There were 4.4 million persons in this category in February 2020. 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 August to 4.469 million from 4.483 million in July. This is back close to pre-recession levels.

These workers are included in the alternate measure of labor underutilization (U-6) that decreased to 8.8% from 9.2% in July. This is down from the record high in April 22.9% for this measure since 1994. This measure was at 7.0% in February 2020 (pre-pandemic).

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 3.179 million workers who have been unemployed for more than 26 weeks and still want a job, down from 3.425 million in July.

This does not include all the people that left the labor force. This will be a key measure to follow during the recovery.

Summary:

The headline monthly jobs number was well below expectations, however the previous two months were revised up by 134,000 combined.  And the headline unemployment rate decreased to 5.2%.

There was some good news - the decline in the unemployment rate, the decline in permanent job losers, and the decline in long term unemployed - however, there are still 5.3 million fewer jobs than prior to the recession, and overall this was a disappointing report, probably due to the sharp increase in COVID cases.