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Economy in Brief

U.S. Payrolls Down Again, Jobless Rate Up Further
by Tom Moeller September 5, 2008

Last month, nonfarm payrolls fell 84,000, according to the Bureau of Labor Statistics. The latest decline was slightly greater than expectations for a 75,000 drop but it was accompanied by downward revisions to prior months' data. Payrolls have declined in each month of this year and it amounts to 605,000 jobs lost.

During the last three months payrolls fell at a 0.7% annual rate. That compared to a rate of decline in excess of 2.0% by the end of the last recession.

The unemployment rate jumped to 6.1% last month versus expectations for just a slight increase to 5.7%. That was the highest level since September of 2003.

Household sector employment fell 342,000 (-0.2% y/y) after a 72,000 worker decline during July. It was the sixth monthly decline this year. The level of the unemployed rose 592,000 (31.4% y/y) after a 285,000 increase in July.

The labor force rose another 250,000 (1.3% y/y) last month and the labor force participation rate held at 66.1% for the third straight month. It was 66.0% during all of last year and 66.2% in 2006. The participation rate amongst adult men was 75.8%, about the same as averaged last year, and amongst adult women it was 61.1% versus 60.6% averaged during 2007.

The average duration of unemployment increased to 17.4 weeks and that was still up from 16.9 weeks averaged during the last two years. The number of those unemployed for more than 27 weeks rose by nearly one half versus one year ago.

From the establishment survey, hiring in the private service sector industries was notably weak. Jobs fell 44,000 but the 18,000 July decline was less than the 76,000 decline reported initially. Prior months' job losses also were revised shallower. Nevertheless, August was the seventh decline in the last eight months and the three-month rate of decline during that period was 0.3%.

A decline of 53,000 (-0.7% y/y) jobs was reported for the professional & business service industries. That was led by a 61,600 (-3.6% y/y) drop in hiring in the management & technical support services area. Temporary help services job also were quite weak as they fell 36,900 (-9.1% y/y). Retail sector jobs fell 19,900 and they're down at a 1.2% rate during the last three months. That rate of decline, however, remained less than the 3.0% rate of this past April. Motor vehicle & parts dealers employment led that drop with a 14,100 August decline and they're down at a 7.3% rate over the last three months. Jobs in the information sector fell 3,000 last month and at a 2.2% rate during the last three. Financial sector jobs fell 3,000 and at a 0.9% rate over the last three months.

These declines have been offset by 11.3% three-month growth in the number of jobs in education and by 2.7% growth health care jobs. The number of finance sector jobs fell 3,000 last month and they're down at a 0.9% rate during the last three. Real estate sector jobs slipped 1,400 and they have been falling at a moderate 0.6% annual rate during the last three months which is an improvement from the 3% to 4% rates of job loss late last year and early this year.

Factory sector jobs fell 61,000 which was the largest monthly decline since mid-2003. Payrolls were down at a 4.1% rate over the last three months though that was slower than the 10% rate of decline by the end of the 2001 recession. The motor vehicle & parts sector shed 39,000 (-12.9% y/y) jobs while jobs in the furniture industry fell 6,800 (-8.4% y/y).

Construction sector employment slipped just 8,000 last month after a little-revised 20,000 drop during July. They fell at a 4.2% annual rate during the last three months versus a 7.8% rate of decline as of June.

Government sector jobs continued to rise and they posted a 17,000 August increase. They've increased at a 0.6% rate during the last three months. Federal government hiring rose at a 1.0% rate during the last three months while state as well as local government hiring rose at a 1.3% and a 0.2% rate, respectively. These rates of growth are down from their recent peaks.

The one month diffusion index, which measures the breadth of job gain or loss (50 is the break-even level), improved to a near-break even 48.9%. The three-month index improved just slightly to 40.1% from the cycle low of 38.3% reached last month. The three-month figure for the factory sector was even weaker at 25.6%. That's up slightly from July but near the lowest since 2003.

Average hourly earnings increased 0.4%, the same as during as during an upwardly revised July. The three-month growth rate rose to 4.3%, its highest since early last year. Factory sector earnings fell 0.2% during August and rose at a 2.3% rate during the last three months, which was near the weakest since late last year. Private service sector earnings rose 0.4% and at an elevated 4.1% rate during the last three months.

China and India: Two Paths to Economic Power from the Federal Reserve Bank of Dallas can be found here.

Employment: 000s August July June Y/Y 2007 2006 2005
Payroll Employment -84 -60 -100 -0.2% 1.1% 1.8% 1.7%
      Previous -- -51 -51 -- 1.3% 1.9% 1.7%
  Manufacturing -61 -38 -44 -3.0% -1.9% -0.5% -0.6%
  Construction -8 -20 -50 -5.7% -1.0% 4.9% 5.2%
Average Weekly Hours 33.7 33.7 33.7 33.8 (August '07) 33.8 33.9 33.8
Average Hourly Earnings 0.4% 0.4% 0.3% 3.6% 4.0% 3.9% 2.7%
Unemployment Rate 6.1% 5.7% 5.5% 4.7% (August '07) 4.6% 4.6% 5.1%
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