July 2018 BLS Jobs Situation Continues Strong

Unemployment

The BLS reported U-3 (headline) unemployment was 3,9 % with the U-6 "all in" unemployment rate (including those working part-time who want a full-time job) changed from 7.8 % to 7.5 %. These numbers are volatile as they are created from the household survey.

BLS U-3 Headline Unemployment (red line, left axis), U-6 All In Unemployment (blue line, left axis), and Median Duration of Unemployment (green line, right axis)

Econintersect has an interpretation of employment supply slack using the BLS employment-population ratio, demonstrated by the graph below. The employment-population ratio moved from 60.4 to 60.5.

Employment-Population Ratio

The jobs picture - when the employment / population as a whole - has been on an uptrend since mid-2011. This ratio is determined by household survey.

  • Econintersect uses employment-population ratios to monitor the jobless situation. The headline unemployment number requires the BLS to guess at the size of the workforce, then guess again who is employed or not employed. In employment-population ratios, the population is a given and the guess is who is employed.
  • This ratio has been in a general uptrend since the beginning of 2014. The employment-population ratio tells you the percent of the population with a job. Each 0.1 % increment represents approximately 300,000 jobs. [Note: these are seasonally adjusted numbers - and we are relying on the BLS to get this seasonal adjustment factor correct]. An unchanged ratio would be telling you that jobs growth was around 150,000 - as this is approximately the new entries to the labor market caused by population growth.
  • The growth in employment since the Great Recession has been in full-time jobs.

 

Employment Metrics

The growth trend in the establishment survey's non-farm payroll year-over-year growth rate was trending up beginning of 2014 but has been trending down beginning in 2015. Year-over-year growth rate insignificantly improved this month.

Unadjusted Non-Farm Payrolls Year-over-Year Growth

Another way to view employment is to watch the total hours worked which no clear trend is obvious.

Percent Change Year-over-Year Non-Farm Private Weekly Hours Worked

The bullets below use seasonally adjusted data from the establishment survey except where indicated:

  • Average hours worked (table B-2) was unchanged at 34.5. A rising number normally indicates an expanding economy.
  • Government employment declined 13,000 (-13K) with the Federal Government up 2K, state governments up 5K and local governments down 20K.
  • The big contributors to employment growth this month was manufacturing (37K), food services (26.2K), and temp help (27.9K). There was a big decline in sporting goods stores (31.8K).
  • Manufacturing was up 37K, and construction was up 19K.
  • The unemployment rate (from household survey) for people between 20 and 24 (Table A-10) improved 0.5 to 6.9 %. This number is produced by survey and is very volatile.
  • Average hourly earnings (Table B-3) was up $0.07 to $27.05.

Private Employment: Average Hourly Earnings

Economic Metrics

Economic markers used to benchmark economic growth (all from the establishment survey).

The truck employment was up 4.4K.

Truck Transport Employment - Year-over-Year Change

Temporary help was up 27.9K.

Temporary Help Employment - Year-over-Year Change

Econintersect believes the transport sector is a forward indicator. Others look at temporary help as a forward indicator.

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