The Glass Half Empty/Full? Employment Report

So, another monthly employment report and, depending mostly upon your political persuasion, either just a blip in an otherwise upward trend or further evidence of a stagnant, deteriorating economy. Personally, I tend to look on it as just a data point in an economic statistic which requires lots of data points to establish some version of reality. Here’s the BEA headline for anyone who didn’t crawl out from under a rock many hours ago:

“Total nonfarm payroll employment increased by 142,000 in August, and the unemployment rate was little changed at 6.1 percent, the U.S. Bureau of Labor Statistics reported today.

The change in total nonfarm payroll employment for June was revised from +298,000 to +267,000, and the change for July was revised from +209,000 to +212,000. With these revisions, employment gains in June and July combined were 28,000 less than previously reported.”

Basically the number came in well below the consensus estimate of 225,000 new jobs, but the trend is still up. The WSJ survey of economists’ reactions to the news is generally along the lines of “move along, nothing to see here.” A sample:

  • Looking at the year as whole after a long string of strong monthly payroll gains, a downside blip in the report can be excused as one of those things. We know too that zero new jobs in manufacturing, containing a 4,600 job decline in motor vehicles, is payback for the seasonally adjusted creation of such jobs in July because the factories never closed. We can also look to the flat change in hours worked, including overtime, and the steady 2.1% year-over-year increase in average hourly wages as indications the drop in payroll expansion is not about slowing growth. We could, but we also the think the main point of today’s report in the context of the year as a whole is it underscores our long-held view of growth without acceleration. –Steve Blitz, ITG Investment Research

Hmm, “growth without acceleration” isn’t exactly a scintillating concept, but I suppose it’s better than the alternative.

The WSJ also has some good graphs which show improvement in the duration of long-term unemployment and involuntary part-time work but unfortunately one which shows a continuing decline in labor force participation.  They also feature this chart which is maybe the most depressing of all.

That sort of dynamic isn’t going to do the vast majority of the citizens much good beyond keeping their heads barely above the waves.

Finally, let’s put an end to the high fiving going on in some quarters concerning the length of the recovery in employment. As the WSJ points out that while the streak of 54 straight months of job creation is the longest dating back to 1939, it is also true that ranking recoveries of 12 months or longer over the past 75 years, this recovery ranks in in the bottom half of those 17 recoveries based on monthly job creation. Or put another way, this recovery still more or less sucks.

Of course, as I said in my opening comments, the reality construct is wholly dependent upon which way you happen to lean politically. At least, the facts suggest we’re muddling along in the proper direction.




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