Recent Updates

  • New Zealand PMI (Dec)
  • Markit PMI: Manufacturing Survey - New Zealand (Dec)
  • Saxony Retail Trade (Nov), Building Permits (Nov)
  • Germany: Building Permits (Nov), Bremen CPI (Dec)
  • US: New Residential Construction (Dec)
  • US: Philadelphia Fed Mfg Business Outlook Survey (Jan)
  • Russia: Nonresident Holdings of Government Debt (Nov); Macedonia: Retail Survey, Construction Survey (Q4), Monetary
  • more updates...

Economy in Brief

U.S. Job Market Emits Mixed Signals; Payrolls & Jobless Rate Firm
by Tom Moeller May 7, 2010

Several factors made the latest job report, from the Bureau of Labor Statistics, an interesting read. The best news was an improvement in the rate of hiring. But that wasn't as encouraging as at first glance because it was accompanied by a rise in the jobless rate. The rate increase, however, wasn't too troubling because it didn't reflect job cuts. The bottom line is that earlier weakness in the labor market is on the mend.

Let's begin with the figures from the establishment survey which indicate a firm 290,000 rise in nonfarm payrolls. The gain followed an upwardly revised 230,000 March increase. These increases were inflated by a 66,000 increase in Census workers which followed a 48,000 March rise. Cutting out government hiring altogether left private sector jobs up 231,000 (-1.2% y/y), the strongest of the five increases in the last six months.

The payroll gain reflected a 116,000 increase in private-services. It also was the best of five gains during the last six months. Since December, jobs have risen 0.5%. Temporary jobs, which have sometimes been a leading job market indicator, rose 26,200 (13.8% y/y) for the seventh consecutive monthly increase. Professional & business services jobs rose 80,000 (0.1% y/y), leisure & hospitality employment increased 45,000 (0.1% y/y) and education & health services jobs rose 35,000 (2.0% y/y). Factory sector employment followed the service sector with a 44,000 increase which was the fourth consecutive monthly increase. Gains have been notable in the metals & machinery industries. Amongst construction businesses, employment rose 14,000 but it was just the second monthly gain of the economic recovery.

Most impressive was the rise in the breadth of hiring last month. Sixty-four percent of 278 private industries increased hiring. That's improved from the recession low when just 17% were increasing payrolls. During the last three months 61% increased hiring. As impressive was that a like 66% of manufacturing industries raised hiring versus 5% at the low.

Not only are there more individuals being hired, they are working longer. The total workweek of 34.1 hours was up from a low of 33.7 last autumn and was the longest in over a year. The factory sector workweek showed an even greater expansion to its longest since early in the recession.

Workers' pay is starting to improve as well. Last month's 0.3% increase in average hourly earnings followed two months of having been unchanged. Nevertheless the y/y gain of 2.3% remains close to its weakest since early-2004.

Let's look at the unemployment rate's increase. The rise to 9.9% reversed three months of stability when the rate was at its lowest since the recession's end. But here's where the figure gets most interesting. The increase was the product of a 550,000 rise (-1.0% y/y) in employment which roughly matched the strongest since before the recession began. That gain was accompanied by a 805,000 jump (-0.0% y/y) in the labor force which was the strongest since the recession's end.

The unemployment rate hides, however, some added strains on the labor market. First, the average duration of unemployment rose to a record 33.0 weeks, roughly twice the level when the recession began. Of those unemployed, 45.9% have been so for six months or longer. If those who are unemployed are added to those individuals who either are marginally attached or who are part-time for economic reasons, the rate rose last month to 17.1%, just under the recession high.

The figures referenced above are available in Haver's USECON database. Additional detail can be found in the LABOR and in the EMPL databases.

What is behind the rise in long-term unemployment? from the Federal Reserve Bank of Chicago is available here.

Employment: 000s April March February Y/Y 2009 2008 2007
Payroll Employment   290 230 39 -1.0% -4.3% -0.6% 1.1%
  Previous -- 162 -14 -- -- -- --
   Manufacturing 44 19 16 -3.5% -11.3% -3.4% -2.0%
   Construction 14 26 -51 -9.0% -15.7% -6.1% -0.8%
   Private Service Producing 166 119 90 -0.3% -3.4% -0.2% 1.7%
   Government 59 56 -23 -0.5% 0.2% 1.3% 1.1%
Average Weekly Hours 34.1 34.0 33.9 33.9(April '09) 33.1 33.6 33.8
Average Hourly Earnings 0.3% -0.1% 0.1% 2.3% 3.0% 3.8% 4.0%
Unemployment Rate 9.9% 9.7% 9.7% 8.6%(April '09) 9.3% 5.8% 4.6%
close
large image