Friday, June 4, 2021

Job growth picks up, and more are working than the headlines indicate

I figured US job growth would bounce back in today’s report for May after a surprisingly low 236,000 gain reported for April, and I was right in that things accelerated.
America's job market recovery picked up some steam in May, with 559,000 positions added back to the economy….

The unemployment rate fell to 5.8%, the Bureau of Labor Statistics reported Friday. This is the lowest rate of joblessness since March 2020, when it stood at 4.4% and full effect of the pandemic lockdown hadn't happened yet.

The labor force participation rate was more or less flat in May at 61.6%, showing that the unemployment rate went down because people found jobs and not only because they dropped out of the workforce.
Seems like good progress, yet this report was portrayed in many areas as a “disappointment”, because they thought the numbers would be even better.

But if you dig into the actual report, I think the numbers were pretty strong. For example, service sectors that had taken big hits since COVID broke out continued to recover in Spring 2021.
In May, employment in leisure and hospitality increased by 292,000, as pandemic-related restrictions continued to ease in some parts of the country. Nearly two-thirds of the increase was in food services and drinking places (+186,000). Employment also rose in amusements, gambling, and recreation (+58,000) and in accommodation (+35,000). Employment in leisure and hospitality is down by 2.5 million, or 15.0 percent, from its level in February 2020.
Still well below peak, but at least the areas within the Leisure/Hospitality sector are creeping their way back.

It also blunts some of the GOP memes that claim these sectors can’t find workers because of expanded unemployment benefits, as the Leisure/Hospitality sectors have been the leading source of job growth in the last 3 months, with nearly 850,000 jobs coming back. Conversely, we’re seeing labor force totals continue to go up, and long-term unemployment continue to go down, which wouldn’t be happening if people were laying back at home content to collecting UI.

What is concerning in recent months is that the growth in construction and manufacturing has hit a wall, at least on a seasonally-adjusted basis.

But a closer look indicates that more people are getting jobs in these sectors – it’s just that it’s in line with what we’d see in a typical Spring, as weather warms.

Job change, May 2021
Construction Seasonally-adjusted -20,000
Non-seasonally adjusted +114,000

Manufacturing
Seasonally-adjusted +23,000
Non-seasonally adjusted +42,000

And it’s a similar trend for the nation as a whole, where there have been more than 2 million jobs added in raw numbers, but because we expect these numbers to rise in Spring, it only comes out as 837,000 on a seasonally-adjusted basis.

On the household survey, there also isn’t a lot of evidence that more people are getting benefits vs working. While the (seasonally-adjusted) labor force dropped by 53,000, 228,000 more people looked for worked on a raw numbers basis. And a seasonally-adjusted 444,000 counted themselves as employed, which raised the employment-population ratio to 58.0% for the first time since COVID became a thing.

The number of people ID’ing as “employed” has steadily grown since COVID vaccinations started picking up in February – nearly 1.4 million in total.

But despite my positivity about the report, we also can’t forget that there’s still quite a distance left, and a lot of jobs still to make up.

So we gotta continue working on both the COVID and stimulus fronts to keep the economy moving. We’re not in any kind of full-employment situation, and we shouldn’t act like it is, or that all these jobs will come back on their own. And the jobs market might have a few more adjustments to make as try to we get back toward pre-COVID levels in a post-COVID World.
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