May jobs report: nothing more nor less than a decent late cycle report

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May jobs report: nothing more nor less than a decent late cycle report

HEADLINES:

• +138,000 jobs added
• U3 unemployment rate down -0.1% from 4.4% to 4.3%
• U6 underemployment rate down -0.2% from 8.6% to 8.4%

Here are the headlines on wages and the chronic heightened underemployment:

Wages and participation rates

• Not in Labor Force, but Want a Job Now: down -146,000 from 5.707 million to 5.561 million
• Part time for economic reasons: down -53,000 from 5.272 million to 5.219 million
• Employment/population ratio ages 25-54: down -0.2% from 78.6% to 78.4%
• Average Weekly Earnings for Production and Nonsupervisory Personnel: up $.03 from $21.97 to $22.00,  up +2.5% YoY.  (Note: you may be reading different information about wages elsewhere. They are citing average wages for all private workers. I use wages for nonsupervisory personnel, to come closer to the situation for ordinary workers.)

Holding Trump accountable on manufacturing and mining jobs

Trump specifically campaigned on bringing back manufacturing and mining jobs.  Is he keeping this promise?

• Manufacturing jobs fell by -1,000 for an average of +2500 vs. the last severn years of Obama’s presidency in which an average of 10,300 manufacturing jobs were added each month.
• Coal mining jobs rose by +400 for an average of +300 vs. the last severn years of Obama’s presidency in which an average of -300 jobs were lost each month

March was revised downward by -29,000. April was also revised downward by -37,000, for a net change of -66,000.

The more leading numbers in the report tell us about where the economy is likely to be a few months from now. These were mixed but on balance positive.

• the average manufacturing workweek was unchanged at 40.7 hours.  This is one of the 10 components of the LEI.
• construction jobs increased by +11,000. YoY construction jobs are up +191,000.

• temporary jobs increased by +12,900.
• the number of people unemployed for 5 weeks or less decreased by -181,000 from 2,335,000 to 2,154,000.  The post-recession low was set 18 months ago at 2,095,000.

Other important coincident indicators help  us paint a more complete picture of the present:

• Overtime rose +0.1 from 3.2 to 3.3 hours.
• Professional and business employment (generally higher- paying jobs) increased by +38,000 and is up +622,000 YoY.
• the index of aggregate hours worked in the economy fell  by -0.2  from 114.4 to 114.2

• the index of aggregate payrolls fell  by -0.1   from 168.0 to 167.9.

Other news included:

• the alternate jobs number contained  in the more volatile household survey decreased by   -233,000 jobs.  This represents an increase of 1,865,000  jobs YoY vs. 2,366,000 in the establishment survey.
• Government jobs fell  by  -9,,000.

• the overall employment to population ratio for all ages 16 and up fell -0.2% from  60.2% to 60.0 m/m  and is  up +0.3%  YoY.
• The  labor force participation rate fell -0.2% m/m and is up +0.1% YoY from 62.9% to 62.7%.

SUMMARY 

This was generally a positive report, with declines in both the U-3 and U-6 unemployment and underemployment rates, and declines in those who are not in the labor force but want a job, and those who are working part time for economic reasons. YoY nominal growth in wages increased back to +2.5%. Most of the other internals were also positive.

The important negatives were the declines in the employment to population ratio and the labor force participation rate — which is the real reason for the decline in the unemployment rate.  It’s also noteworthy that manufacturing jobs actually declined this month. That both of the last two months were also revised lower is also not a good sign.

All in all, this was a decent late cycle report, nothing less and nothing more.