Tag Archive for 'nonfarm employment'

Wells Fargo Economic Group Reports: Employment: A Surprisingly Decent Nonfarm Job Gain

Nonfarm employment rose 163,000 in July, which was better than expected but still not enough to keep the unemployment rate from rising. The jobless rate rose to 8.3 percent. Total hours worked rose just 0.1 percent.

Slightly Stronger Job Growth But Unemployment Increased

Nonfarm employment rose by 163,000 in July, with fairly broad based gains across most major industries. While the headline number was considerably higher than the consensus estimate of around 100,000 jobs, data for June were revised lower and now show a gain of just 64,000 jobs. Part of July’s upside surprise appears to be due to fewer motor vehicle assembly plant shutdowns than usual, mostly at Japanese­ owned plants that are still making up for production lost following last year’s earthquake and tsunami.

Job growth also appears to have been bolstered in July by seasonal hiring at restaurants. Restaurants and bars added 29,400 jobs in July, following a much smaller gain in June. Hiring also picked up in education and health care, which added 38,000 jobs following an odd 6,000 job loss in June. Most other changes were similar to recent months. Retail trade added 7,000 jobs, financial services and construction were essentially unchanged and government jobs fell by 9,000, the same as in the previous month. One interesting note is that information services added 11,000 jobs in July, mostly at motion picture and sound studios. The increase may be tied to the election campaign, so maybe there is still some stimulus in the pipeline.

Even with the 0.1 percentage point increase in the unemployment rate, this morning’s employment report should go a long way toward soothing fears that the economy is poised to slide back into recession. That said, July’s 163,000 net new nonfarm jobs probably overstate the improvement that actually took place in July. The job gains in motor vehicles and restaurants and bars, for example, were all due to fewer­ than ­usual job cuts in July, which followed smaller­ than­ usual gains in June. The best way to look at the data is to average the first seven months of the year, which shows nonfarm payrolls rising by an average of 151,000 per month, which is a decent pace, but not enough to keep the unemployment rate from rising.

The unemployment rate rose 0.1 percent in July, which was in line with our monthly forecast, which has long had the unemployment rate rising back up to 8.3 percent in the summer. We had expected to see an increase based on issues related to seasonal adjustment, which have tended to understate the unemployment rate from October through March and overstate it from April to June. From a purely technical standpoint, civilian employment fell by 195,000 during July, while the labor force fell by 150,000. The employment­ population ratio fell 0.2 percentage points to 58.4, which matches the low for the year. The median duration of unemployment fell the second straight month, hitting a nearly three-year low of 16.7 weeks. Any cheer over that drop is tempered, however, by the rise in folks dropping out of the workforce, which increased 382,000 over the past two months, more than two thirds of which stated they currently want a job.

 

Nonfarm Employment Change

Change in Employment, In Thousands

 

U.S. Employment by Industry

Year­over­Year Percent Change of 3­M Moving Average

Total Nonfarm Trade, Trans. & Utilities Government Educ. & Health Svcs. Prof. & Bus. Svcs. Leisure & Hospitality Manufacturing Financial Activities Construction Other Services Information

 

Unemployment Rate ­SA vs. NSA

Percent

 

Source: U.S. Department of Labor and Wells Fargo Securities, LLC

Wells Fargo Economic Group Reports: Nonfarm Employment Rises Solidly In December

Recent stronger nonfarm employment data and drop in the unemployment rate to 8.5 percent provide at least a glass is “half full” assessment of the economic environment. Unfortunately, the glass is very small.

Employment Rises Solidly In December

Nonfarm payrolls rose by 200,000 in December. There were five weeks between the November and December employment surveys and that may have allowed for more holiday-season hiring to be captured in the December report.

Retail trade added 27,900 jobs in December, following a 38,800-job rise in November. Hiring also surged at couriers and messengers, reflecting the boom in online retailing.

Unemployment Rate Falls to 8.5 Percent

The household employment data now include new seasonal factors, which tended to reduce the swings in the jobless rate.

Household employment increased by 176,000 in December and rose by 1.4 million jobs during the second half of 2011. During this time, the nonfarm numbers show that close to 43 percent of the job gains were in low-paying sectors, which helps explain why hourly earnings and personal income grew so sluggishly.

A Closer Look At The December Employment Report

Nonfarm employment rose by 200,000 in December, as hiring jumped at couriers and messengers in order to handle the surge in online holiday retail sales. The unemployment rate fell to 8.5 percent.

A Stronger Report, But Not a Game Changer

While December’s net gain of 200,000 nonfarm jobs topped consensus estimates, the report was helped by a host of special factors and also followed downward revisions to the two previous months. Three industries accounted for a disproportionate share of December’s increase, including couriers and messengers, which added 42,200 jobs. Similar spikes were seen during the past couple of years and those gains were completely reversed the following month. Hiring in retail trade and construction may also have been impacted by temporary factors. The former added 27,900 jobs, mostly at department stores and clothing outlets. The latter was clearly helped by warmer than usual weather, leading to a 17,000-job rise in construction payrolls. Excluding couriers, retailing and construction, nonfarm payrolls rose 112,900 in December, which is close to the 100,000 and 112,000 gains reported for November and October, respectively.

Even with some distortions, the quality of jobs improved modestly in December. Manufacturers added 23,000 jobs during the month, with solid gains at producers of motor vehicles, machinery and computers and electronic products. Average weekly hours worked in manufacturing rose 0.2 percent in December, partially reversing a 0.5 percent drop in the prior month. Aggregate weekly hours in manufacturing rose 0.5 percent, which bodes well for industrial production. Hours rose even more dramatically in mining and construction, jumping 1.2 and 1.1 percent, respectively. Total hours worked rose at a 3.2 percent annual rate in the fourth quarter, which is the third best quarterly showing since the recession ended, consistent with our forecast for 3.7 percent real GDP growth during Q4.

The rise in manufacturing employment and hours worked should bolster income growth. Average hourly earnings rose 0.2 percent in December and weekly earnings rose 0.5 percent, reflecting the rise in hours worked. The better news on earnings helps reverse some of the earlier weaker readings. Nearly 43 percent of the jobs added during the past six months have been in relatively low paying industries, such as retailing, temporary staffing, leisure as well as hospitality and home health care. These industries have accounted for nearly twice as large a share of job growth in recent months as they account for the overall employment base.

December’s drop in the unemployment rate looks fairly genuine, despite a 50,000 person drop in the labor force. The BLS updates the seasonal adjustment factors each December and the new numbers removed November’s plunge. The jobless rate still drifted lower during the second half 2011, however, as civilian employment rose by 1.4 million compared to population growth of only 1.1 million over the same period. The number of unemployed has fallen by 927,000 since June, while the number of people not currently in the workforce rose by 617,000.