THE BASIS POINT

January BLS Weak

 

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 +151,000 (E). Revisions to the two previous months subtracted 2,000 making the total increase since the last report 149,000.

 

– the size of the civilian noninstitutional adult population increased by 461,000 to 252,397,000 (H).

– 502,000 more people were in the labor force last month. These are people who are now working or, at least, state that they are looking for jobs (H)

With a labor participation rate of 62.7% 289,000 more jobs were necessary to keep pace with population growth. With the adjustments for the previous 2 months we had 140,000 fewer population-adjusted jobs added than that. (H) The Employment/Population increased to 59.6%

The Labor Participation Rate rose from 62.6% to 62.7%. It was 62.9% a year ago. It peaked at 67.3% in April 2000.

– Nominal job growth last month was 149,000. This accounts for the changes for the 2 previous months.
– the Unemployment Rate fell to at 4.9%. It was 5.7% a year ago.(B)
– Average hourly earnings was $25.39 up from the previous month’s $25.27. (E)
– Average work week was up from 34.5 hours to 34.6 hours. (E)
– Private jobs were +158,000 (without adjustments for previous 2 months). Government jobs were -7,000. (E).

– Good producing jobs were -7,000. The two previous months were revised to -7,000 and -15,000 (E). We are in a manufacturing recession.

 

-The labor participation rate (percent of adult noninstitutionalized population who are part of the labor force) rose from 62.6% to 62.7%. It was 62.9% a year ago. (H) This, not the unemployment rate, is the number which should get everyone’s attention. It is this 62.75% of the adult noninstitutionalized population who get pay checks and contribute to GDP.
Last month BLS measured 4 sets of people entering or leaving the jobs market:
– Job losers and persons who completed temporary jobs was 3,664,000 down 132,000 from previous month’s Job Losers and down 582,000 year-on-year. (H)

– Job leavers was 766,000. This includes anyone who retired or voluntarily left working. This is down 55,000 from previous month and down 85,000 year-on-year. (H)

-Reentrants was 2,468,000. Reentrants are previously employed people who were looking for a job and found one. This was +12,000 from the previous month and -85,000 year-on-year.(H)

-New entrants were 827,000. These are people who never worked before and who are entering the labor force for the first time. This was -31,000 from previous month and -199,000 year-on-year.

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 4,000 fewer people working part-time for economic reasons.
The presentation of the total change in jobs is like looking at the final score of a game. The details tell the story:

– 149,000 more people are working.

– 502,000 fewer people are in the civilian labor force.

Food Services and Drinking Establishment added 47,000. Retail added 58,000. Leisure and Hospitality added 44,000. Those 3 total 149,000. That is the same number as the total gain. In short. all the jobs gain was in low paying jobs.

Employment in professional and business services increased by 9,000 in December

Construction gained 18,000 in December

Health care employment rose by 44,000 in December

If one looks inside the BLS at the raw (not seasonally adjusted data) it actually shows that 2,989,000 fewer people were working in December. This size fall in the raw data is typical of the end of the Christmas shopping season. It does concern me that the adjustment is about 20x the headline data. Are we measuring jobs or the accuracy of the adjustment?

This report is extremely weak and the Jobs market will probably get worse. This coupled with the very weak 4thQ2015 GDP points to an economy headed into near-recession. We were struggling to maintain 2% GDP growth post the Great Recession and are now failing.

 

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