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August jobs report: continued slow incremental progress

Summary:
August jobs report: continued slow incremental progress HEADLINES: 1,371,000 million jobs gained. The gains since May total about 48% of the 22.1 million job losses in March and April. The alternate and more volatile measure in the household report was 3,756,000 jobs gained, which factors into the unemployment and underemployment rates below. U3 unemployment rate fell -1.8% from 10.2% to 8.4%, compared with the January low of 3.5%. U6 underemployment rate fell -2.3% from 16.5% to 14.2%, compared with the January low of 6.9%. Those on temporary layoff decreased 3.1 million to 6.2 million. Permanent job losers increased by 534,000 to 3.1 million. June was revised downward by -10,000. July was also revised downward by -29,000 respectively, for a net loss of

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August jobs report: continued slow incremental progress

HEADLINES:

  • 1,371,000 million jobs gained. The gains since May total about 48% of the 22.1 million job losses in March and April. The alternate and more volatile measure in the household report was 3,756,000 jobs gained, which factors into the unemployment and underemployment rates below.
  • U3 unemployment rate fell -1.8% from 10.2% to 8.4%, compared with the January low of 3.5%.
  • U6 underemployment rate fell -2.3% from 16.5% to 14.2%, compared with the January low of 6.9%.
  • Those on temporary layoff decreased 3.1 million to 6.2 million.
  • Permanent job losers increased by 534,000 to 3.1 million.
  • June was revised downward by -10,000. July was also revised downward by -29,000 respectively, for a net loss of -39,000 jobs compared with previous reports.

Leading employment indicators of a slowdown or recession

I am still highlighting these because of their leading nature for the economy overall.  These were positive:

  • the average manufacturing workweek rose 0.2hours from 40.7 hours to 40.9 hours. This is one of the 10 components of the LEI and will be a positive.
  • Manufacturing jobs rose by 29,000. Manufacturing has still lost-720,000  jobs in the past 6 months, or -5.6% of the total. 53% of the total loss of 10.6% has been regained.
  • Construction jobs rose by 16,000. Even so, in the past 6 months -225,000 construction jobs have been lost, -5.6% of the total. Almost 2/3’s of the worst loss of 15.2% loss has been regained.
  • Residential construction jobs, which are even more leading, rose by 3,200. Even so, in the past 6 months there have still been -21,200 lost jobs, or about 2.5% of the total.
  • temporary jobs rose by 106,700. Since February, there have still been -471,900 jobs lost, or 16% of all temporary help jobs.
  • the number of people unemployed for 5 weeks or less fell by -921,000 to 2.281 million, compared with April’s total of 14.283 million.
  • Professional and business employment rose by 197,000, which is still -1.475 million, or about 7%. below its February peak.

Wages of non-managerial workers

  • Average Hourly Earnings for Production and Nonsupervisory Personnel: rose $0.18 from $24.63 to $24.81, which is a gain of 3.5% in the 6 months since the pandemic began. Gains had previously reflected that job losses were primarily among lower wage earners, who have been disproportionately recalled to work. That we have increased employment and increased wages as well is a very positive development.

Aggregate hours and wages:

  • the index of aggregate hours worked for non-managerial workers rose by 1.0%. In the past 6 months combined this has nevertheless fallen by about -8.5%.
  •  the index of aggregate payrolls for non-managerial workers rose by 1.7%. In the past 6 months combined this has nevertheless fallen by about -6.4%.
Other significant data:
  • Full time jobs were responsible for 2.837,000 of the gain in the household report.
  • Part time jobs were responsible for 991,000 of the gain in the household report.
  • The number of job holders who were part time for economic reasons fell by -871,000 to 7.572 million. This is still an increase since February of 3.254 million.

A special note: Included in the total were 238,000 census hires. Without these, the net gain in jobs was 1,133,000.

SUMMARY

This was another positive report, but with some shades of difference. The establishment survey was the smallest gain in the past 4 months, even before census hires are taken in to account. By contrast, the household report, which determines the unemployment rate, was much stronger.

All of the leading indicators in the report were positive. Further, that average hourly wages for nonsupervisory jobs rose along with the number of recalls was very good news on the wage front.

The one significant concern is that the number of permanent job losses increased to a level on par with April and June, the worst months since the pandemic hit. This is a sign that areas of unemployment are becoming permanent and will not automatically rebound with the control of the coronavirus.

All in all, the message is that of continued substantial, but incremental, gains since the April bottom in jobs. At the rate of gains in the past two months, it would take another 8 months to regain all the jobs lost in the first two months of the pandemic

Politically, this is *relatively* helpful to the Trump campaign, but it is by no means good enough to overcome the huge losses overall this year. There will only be one more jobs report before the election, and unless there is a miracle in the next month – which is needless to say very unlikely – Trump is going to face Election Day with a poor jobs record.

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