Last week saw two important releases: GDP and BLS. The BLS Employment report is discussed in detail below.
GDP was mixed. The headline looked good at +3.6% but was fattened by the large increase in inventories. Gross Private Domestic Investment was +16.7%. One bit of data which should always be regarded is Final Sales of Domestic Products which was +1.9%. That fat gain in Inventories will dissipate next quarter. Consumer spending which drives the economy.
This month's BLS Employment Situation Report is analyzed in detail below.
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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 includes 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 +203,000. (E). The two previous months' gains were revised to +175,000 (October) and +238,000 (September). Those had been +200,000 (October) and +163,000 (September.) That is a gain (for October and September) of +9,000 from the previous report making the net gain of +212,000 in jobs since the last report.
- the size of the civilian noninstitutional adult population increased by 186,000 in November to 246,567,000 (H).
455,000 entered people the labor force in November. This restores some sanity to the data which indicated that 720,000 people had left the labor force in October (H).
With a labor participation rate of 63.0% 117,200 more jobs were necessary to keep pace with population growth. We had 94,888 more jobs added than that including the changes from October and September. (H) The Employment/Population rose from 58.3% to 58.6%.
The Labor Participation Rate rose to 63.0% from 62.8%. It was 63.6% a year ago.
The civilian noninstitutional population is 2,393,000 (H) more than 12 months ago. With a labor participation rate of 63.0% we require 1,508,000 more jobs in the past 12 months to keep pace with population growth. We had 1,109,000 (H) more folks working.
- Real (population adjusted) job gain in November was 130,300. This accounts for the changes for October and September.
- the Unemployment Rate was 7.023% down from 7.280% in October 2013(B).
- Average hourly earnings was $24.15 up from $24.11 in October 2013 (E)
- Average work week was 34.5 hours up from 34.4 hours October 2013 (E)
- Private jobs were +196,000. Government jobs were +7,000 (E)
-Good producing jobs were +44,000. The two previous months were revised to +31,000 and +29,000 (E)
-The size of the civilian labor force fell rose 154,839,000 to 155,294,000 an increase of 455,000. (H) This number made up some of the decrease of 720,000 in the previous report.
-The labor participation rate (percent of adult noninstitutionalized population who are part of the labor force) rose to 63.0.%. It was 63.6% a year ago. (H) This, not the unemployment rate, is the number which should get everyone's attention. It is this 63.0% of the adult noninstitutionalized population who get pay checks and contribute to GDP.
According to the 4 week moving average of Initial Jobless Claims from 12/5, 1,289,000 people lost their jobs in the prior 4 weeks. That normalizes to 1,396,000 lost jobs in a calendar month (there are about 13 4-week periods in a 12 month year.)
In November 2013 BLS measured 4 sets of people entering or leaving the jobs market:
- Job losers and persons who completed temporary jobs was 5,804,000 down 449,000 from previous month's Job Losers and down 625,000 from November 2012. (H)
- Job leavers was 893,000. This includes anyone who retired or voluntarily left working. This up 32,000 from previous month and down 33,000 from November 2012. (H)
-Reentrants was 3,073,000. Reentrants are previously employed people who were looking for a job and found one. This was -44,000 from the previous month and -252,000 from November 2012.(H)
-New entrants were 1,165,000. These are people who never worked before and who are entering the labor force for the first time. This was -58,000 from previous month and -161,000 from November 2012.
One line in the BLS Report is termed "people employed part-time for economic reasons." These are people who want to work full time but their employer, for whatever reason, decide to employ them only part-time. In this month's report there were 178,000 fewer people working part-time.
The presentation of the total change in jobs is like looking at the final score of a game. The details tell the story:
- 212,000 more people are working.
- 455,000 more people are in the civilian labor force.
The unemployment rate decreased 0.257%. We are -399,000 real (population adjusted) jobs for the past 12 months..
45,800 of the new jobs were in retail.
This report indicates modest improvement for jobs for November. Over the last year jobs have not been increasing at a pace fast enough to keep pace with population growth. This report by no means indicates that the economy is generating jobs at a healthy rate. We are not even, for the past year, keeping pace with population growth. The Unemployment Rate (the number which the press insists on reporting as being more important than all else) is down not so much because there are more people working as it is because more people have left the labor force. In the past 12 months the civilian, adult, non-institutional population has increased by 2,400,000 and the number of people work has decreased by 25,000.
It is, for the most part, the people who are working which keep the economy going and pay taxes to keep the government going. Having a continually smaller percent of the population working is not good news.
Dick Lepre
dicklepre@rpm-mtg.com
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