Mish's Global Economic Trend Analysis

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Trends in Full-Time Employment vs. Civilian Non-Institutional Population Posted: 03 Jul 2014 11:04 AM PDT This month's job report showed a seasonally-adjusted decline in full-time employment of 523,000. Let's dive a little deeper and look at full-time employment vs. the civilian non-institutional population. The latter is non-seasonally adjusted, yet shows no seasonal variations, so we can compare to seasonally-adjusted employment numbers. First, let's start with a look at widely-touted gains in employment that show jobs are at an all-time high. Total NonFarm Employment 2003-2014 Full-Time Employment 2003-2014 Full-time employment was 121,875,000 right at the onset of the recession in November 2007. Today full-time employment is 118,204,000. The difference is 3,671,000. In the last month, full-time employment declined by 523,000 while voluntary part-time employment rose by a whopping 840,000.  Meanwhile, those wanting full-time employment (but only finding part-time employment) rose by 250,000. Full-Time Employment 1970-2014 Never before has it taken so long to recover employment back to pre-recession peaks. Let's look at this another way: How fast is employment growing vs. the rise in population? Full-Time Employment vs. Civilian Non-Institutional Population The green line (population minus full-time employment) shows that from the mid-1980s through the start of the recession, full-time employment outpaced population growth. Since then full-time employment has lagged. Such details shows seemingly good job numbers are nowhere near as good as widely touted. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Nonfarm Payrolls +288,000, Unemployment Rate 6.1%; Voluntary Part-Time Employment +840,000; Full-Time Employment -523,000 Posted: 03 Jul 2014 09:01 AM PDT Initial Reaction On the surface, this appeared to be a very strong jobs report from both the household survey and establishment survey perspective. The establishment survey reported a gain of 288,000 jobs while the household survey sported a gain in employment of 407,000. In addition, May was revised up from +217,000 to + 224,000, and April revised up from +282,000 to +304,000. Digging deeper into the details, strength was entirely part-time (and then some). Voluntary part-time employment rose by a whopping 840,000 and involuntary part-time employment rose by 275,000. Compared to a total gain of employment of 407,000, the gain in total part-time employment was 1,115,000. I confirmed with the BLS that one cannot directly subtract those numbers because of seasonal reporting. However, one can compare seasonally-adjusted full-time employment this month to seasonally-adjusted full-time employment last month. Doing so shows a decline in full-time employment of 523,000! May BLS Jobs Statistics at a Glance Nonfarm Payroll: +288,000 - Establishment Survey Employment: +407,000 - Household Survey Unemployment: -325,000 - Household Survey Involuntary Part-Time Work: +275,000 - Household Survey Voluntary Part-Time Work: +840,000 - Household Survey Baseline Unemployment Rate: -0.2 at 6.1% - Household Survey U-6 unemployment: -0.1 to 12.1% - Household Survey Civilian Non-institutional Population: +192,000 Civilian Labor Force: +81,000 - Household Survey Not in Labor Force: +111,000 - Household Survey Participation Rate: +0.0 at 62.8 - Household Survey Additional Notes About the Unemployment Rate The unemployment rate varies in accordance with the Household Survey, not the reported headline jobs number, and not in accordance with the weekly claims data. In the past year the working-age population rose by 2,262,000. In the last year the labor force declined by 128,000. In the last year, those "not" in the labor force rose by 2,390,000 Over the course of the last year, the number of people employed rose by 2,146,000 (an average of 178,833 a month) The working-age population rose by over 2 million, but the labor force declined. People dropping out of the work force accounts for nearly all of the declining unemployment rate. June 2014 Employment Report Please consider the Bureau of Labor Statistics (BLS) May 2014 Employment Report. Total nonfarm payroll employment increased by 288,000 in June, and the unemployment rate declined to 6.1 percent, the U.S. Bureau of Labor Statistics reported today. Job gains were widespread, led by employment growth in professional and business services, retail trade, food services and drinking places, and health care. Click on Any Chart in this Report to See a Sharper Image Unemployment Rate - Seasonally Adjusted Nonfarm Employment January 2003 - June 2014 click on chart for sharper image Nonfarm Employment Change from Previous Month by Job Type Hours and Wages Average weekly hours of all private employees has been flat for four months at 34.5 hours. Average weekly hours of all private service-providing employees was flat at 33.3 hours. Average hourly earnings of private workers rose $0.04 to $20.58. Average hourly earnings of private service-providing employees rose $0.03 to $20.36. For discussion of income distribution, please see What's "Really" Behind Gross Inequalities In Income Distribution? Birth Death Model Starting January, I dropped the Birth/Death Model charts from this report. For those who follow the numbers, I keep this caution: Do not subtract the reported Birth-Death number from the reported headline number. That approach is statistically invalid. Should anything interesting arise in the Birth/Death numbers, I will add the charts back. Table 15 BLS Alternate Measures of Unemployment click on chart for sharper image Table A-15 is where one can find a better approximation of what the unemployment rate really is. Notice I said "better" approximation not to be confused with "good" approximation. The official unemployment rate is 6.1%. However, if you start counting all the people who want a job but gave up, all the people with part-time jobs that want a full-time job, all the people who dropped off the unemployment rolls because their unemployment benefits ran out, etc., you get a closer picture of what the unemployment rate is. That number is in the last row labeled U-6. U-6 is much higher at 12.1%. Both numbers would be way higher still, were it not for millions dropping out of the labor force over the past few years. Labor Force Factors Discouraged workers stop looking for jobs People retire because they cannot find jobs People go back to school hoping it will improve their chances of getting a job People stay in school longer because they cannot find a job Disability and disability fraud Were it not for people dropping out of the labor force over the past several years, the unemployment rate would be well over 9%. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

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