May jobs report: a welcome positive shock – by New Deal democrat HEADLINES: 2,509,000 million jobs added. This makes up about 12% of the 22.1 million job losses in March and April. U3 unemployment rate improved 1.4% to 13.3%, compared with the January low of 3.5%. U6 underemployment rate improved 1.6% to 21.2%, compared with the January low of 6.9%. March and April were both revised further downward, by -492,000 and 150,000 respectively, for a net of -642,000 more jobs lost 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 uniformly very positive: the average manufacturing workweek rose 0.8 hours from 38.1 to 38.9
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May jobs report: a welcome positive shock
HEADLINES:
- 2,509,000 million jobs added. This makes up about 12% of the 22.1 million job losses in March and April.
- U3 unemployment rate improved 1.4% to 13.3%, compared with the January low of 3.5%.
- U6 underemployment rate improved 1.6% to 21.2%, compared with the January low of 6.9%.
- March and April were both revised further downward, by -492,000 and 150,000 respectively, for a net of -642,000 more jobs lost 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 uniformly very positive:
- the average manufacturing workweek rose 0.8 hours from 38.1 to 38.9 hours. This is one of the 10 components of the LEI and will be a positive.
- Manufacturing jobs rose by 225,000. Manufacturing has still lost 1.145 million jobs in the past 3 months, or close to 10% of the total.
- construction jobs rose by 464,000. Even so, in the past 3 months -596,000 construction jobs have been lost, or about 8% of the total.
- Residential construction jobs, which are even more leading, rose by 65,600. Even so, in the past 3 months there have still been -58,800 lost jobs, or about 7% of the total.
- temporary jobs rose by 41,300. Since February, there have still been -852,800 jobs lost, or over 1/4 of all temporary help jobs.
- the number of people unemployed for 5 weeks or less declined to 3.875 million, compared with April’s total of 14.283 million. This is similar to the “less awful” readings of the weekly initial jobless claims.
- Professional and business employment rose by 127,000, which is still 2.156 million, or about 10% below its February peak.
Wages of non-managerial workers
- Average Hourly Earnings for Production and Nonsupervisory Personnel: declined $0.14 from $25.14 to $25.00, which is still a gain of over 3% in 2 months. This reflects that job losses were primarily among lower wage earners.
Aggregate hours and wages:
- the index of aggregate hours worked for non-managerial workers rose by 4.9%. In the past 3 months combined this has nevertheless fallen by about 10%.
- the index of aggregate payrolls for non-managerial workers rose by 4.4%. In the past 3 months combined this has nevertheless fallen by about 11%.
Other significant data:
- Full time jobs were responsible for 2.2 million of the gains.
- Part time jobs were responsible for 1.6 million of the gains.
- The number of job holders who were part time for economic reasons declined by 254,000 million to 10.633 million. This is still an increase since February of 6.315 million.
SUMMARY
This report was a positive shock. Rehiring in May outweighed the continuing and spreading layoffs. At first blush it appears this was primarily among the retail and leisure and hospitality sectors which were more than decimated in March and April.
A few sectors have recovered more than half of the jobs that were lost, but most have only regained 10% or 20% of their losses. Further, because average hourly wages have maintained over 80% of the increase in April – because lower wage jobs were primarily lost – this strongly suggests that the job recalls were relatively speaking tilted towards higher paying jobs as well.
Most importantly, aggregate payrolls are still down more than 10% from their recent peak. Unless a miracle happens and a huge majority of the job losses are reversed in the next 45 days, when the enhanced unemployment insurance passed by Congress runs out in July, there is going to be a major knock-on shock to the economy.