Fundamentals have been modest at best. Most significant this week were a mediocre BLS report and the change in the language used in the Fed Beige Book. It went from describing growth previously as "moderate pace" to "modest to moderate pace." My take is this: the loose monetary policy of the Fed simply has not achieved the growth wanted. The Fed cannot simply say, "You know we have tried everything and nothing is really working."
The story remains the same: extremely large Federal government deficits, extremely accommodative monetary policy and near zero real growth in jobs.
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Inside the BLS Employment Situation Report
This is my monthly look inside the BLS Employment Situation Report. There are two BLS Surveys: the Establishment and the Household. Establishment surveys about 141,000 businesses and government agencies, representing approximately 486,000 individual worksites. It is taken each month during the week which includes the 12th of the month. Household is a survey of 60,000 households taken each month during the week which included the 12th of the month.
Each item below is suffixed with (H) if it is from the Household Survey, (E) if it is from the Establishment Survey, and (B) if it is from both.
- Nominal Nonfarm jobs was +175,000. (E). The two previous months' gains were revised to +149,000 (April) and +142,000 (March). Those had been +165,000 (March) and +138,000. That is a loss (for April and March) of 12,000 from the previous report making the net gain in jobs since the last report of 163,000.
- the size of the civilian noninstitutional adult population increased by 188,000 in May to 245,363,000 (H). With a labor participation rate of 63.4% 119,000 more jobs were necessary to keep pace with population growth. We had 44,000 more jobs added than that including the changes from April and March. (H) The Employment/Population ratio was steady at 58.6%.
The civilian noninstitutional population is 2,297,000 (H) more than 12 months ago. With a labor participation rate of 63.4% we require 1,520,000 more jobs in the past 12 months to keep pace with population growth. We had 1,596,000 (H) more folks working. The increase in real (population adjusted) jobs in the past year is 76,000.
- Real (population
adjusted) job growth in May was 44,000. This accounts for the changes for March and April.
- the Unemployment Rate was 7.578% up from 7.510% in April 2013(B).
- Average hourly earnings was $23.89 up from $23.88 in April 2013 (E)
- Average work week was 34.5 hours the same as 34.5 hours April 2013 (E)
- Private jobs were +178,000. Government jobs were -3,000 (E)
-Good producing jobs were -1,000. The two previous months were revised to -15,000 and +14,000. (E)
-The size of the civilian labor force rose from 155,238,000 to 155,658,000 an increase of 420,000. (H)
-The labor participation rate (percent of adult noninstitutionalized population who are part of the labor force) was 63.4.% up from 63.3%. It was 63.8% a year ago. (H) This, not the unemployment rate, is the number which should get everyone's attention. It is this 63.4% of the adult noninstitutionalized population who get pay checks and contribute to GDP.
According to the 4 week moving average of Initial Jobless Claims, 1,410,000 people lost their jobs in the last 4 weeks. That normalizes to 1,527,500 lost jobs in a calendar month (there are about 13 4-week periods in a 12 month year.) This is up from the previous month's 1,483,000 jobs lost/month.
In May 2013 BLS measured 4 sets of people entering or leaving the jobs market:
- Job losers and persons who completed temporary jobs was 6,147,000 down 263,000 from April's Job Losers and down 741,000 from April 2012. (H)
- Job leavers was 944,000. This includes anyone who retired or voluntarily left working. This up 80,000 from previous month and up 42,000 from April 2012. (H)
-Reentrants was 3,333,000. Reentrants are previously employed people who were looking for a job and found one. This was +182,000 from the previous month and -117,000 from April 2012.(H)
-New entrants were 1,268,000. These are people who never worked before and who are entering the labor force for the first time. This was ---12,000 from previous month and -79,000 from April 2012.
The presentation of the total change in jobs is like looking at the final score of a game. The details tell the story:
- 163,000 more people are working
- 420,000 more people are in the civilian labor force
The unemployment rate increased 0.068%. We are +76,000 real (population adjusted) jobs for the past 12 months. This is not what a recovery looks like.
The economy is failing to produce jobs for people entering the labor force for the first time. We still have underlying serious issues with the j
obs market. These issues are structural not cyclical.
The U.S. economy is no longer producing jobs for folks who do not have a college degree or recognized trade skills. Jobs performed by those without education or skills are either being automated or offshored. The very large increases in the cost of college education are making education less affordable as it becomes more necessary.
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