Friday, August 4, 2017

A good July jobs report, but no different than Obama years

Today featured a pretty good jobs report that dropped on Friday morning, on both the employment and wage fronts.
Total nonfarm payroll employment increased by 209,000 in July, and the unemployment rate was little changed at 4.3 percent, the U.S. Bureau of Labor Statistics reported today. Employment increased in food services and drinking places, professional and business services, and health care.…

In July, average hourly earnings for all employees on private nonfarm payrolls rose by 9 cents to $26.36. Over the year, average hourly earnings have risen by 65 cents, or 2.5 percent. In July, average hourly earnings of private-sector production and nonsupervisory employees increased by 6 cents to $22.10. (See tables B-3 and B-8.)

The change in total nonfarm payroll employment for May was revised down from +152,000 to +145,000, and the change for June was revised up from +222,000 to +231,000. With these revisions, employment gains in May and June combined were 2,000 more than previously reported. Monthly revisions result from additional reports received from businesses and government agencies since the last published estimates and from the recalculation of seasonal factors. Over the past 3 months, job gains have averaged 195,000 per month.
So the mess that has been the Trump White House and the GOP Congress over the last couple of months isn’t carrying over into harming the economy, at least not yet. But I do have to take issue with some of the “analysis” that came out after these numbers, which seemed to be nothing more than blatant cheerleading.
“This was a banner jobs report,” said Jed Kolko, chief economist at Indeed.

“With the strong payroll number in July, job growth in the past three months is ahead of the 2016 pace and way ahead of what’s needed to keep up with population growth. Working-age adults are now more likely to be employed than at any time since the recession.”

In July the U.S. economy added 209,000 jobs and the unemployment rate fell to 4.3%. Expectations were for payrolls to grow by 180,000. The unemployment rate fell as expected…

“For the second straight month, payroll employment beat consensus expectations,” said Neil Dutta, head of economics at Renaissance Macro.

“The July employment report was solid all around with strong payroll growth, rising earnings, and an improvement in labor force participation. The labor market data seems consistent with an economy growing 2.5 to 3.0 percent, not 2.0 percent.”
Hold on there, tigers. The “fall” in unemployment was from 4.357% to 4.349%, so let’s not go too crazy about a drop of 0.008%. The better part of the household survey was the increase in the participation rate to 62.9% and employment-population ratio to 60.2%. But even those increases only get us back to where we were at in April, so we’re merely continuing to stay in a good place.

And the 12-month rate of total job growth is still at 1.49%, which is actually the lowest mark since 2013. Don’t get me wrong, adding over 180,000 jobs a month is still very good, especially as we are at or near full employment. But if anything, that job growth is slightly below what we’ve had for the last 4-6 years. So explain to me how that indicates growth is going to accelerate from the 2% area that it’s mostly been in for the last few years?

While I did like the 0.3% increase in average hourly wages (best since February), we also had a 9-cent-an-hour increase in July 2016, and at that time, hourly wages were up 2.8% for the last year vs 2.5% today. That 2016 reality didn’t keep a whole lot of blue-collars from voting for Trump that November in the hope that their job prospects and wages would get better. But that's not happening yet, despite this chart's indications which show annual wage growth should be rising when unemployment is this low.

I reiterate, this is still a strong jobs report, and it shows we are still in expansion mode 8 years after the end of the Great Recession. But let’s see things stay good for more than a couple of months before we start claiming that the long-predicted “Trump Boom” is actually hitting Main Street, shall we?

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