employment and the March 2016 jobs report

Last Friday, as usual, the Bureau of Labor Statistics of the Labor Department published its monthly Employment Situation for March 2016.  The report said the economy added 215,00o new positions last month.  Revisions to prior months’ data were insignificant a–a loss of -1,000 jobs.

Despite the continuing strong jobs creation, the unemployment rate ticked up slightly to (a still very favorable) 5% of the workforce.  In the past, that figure would be regarded as full employment. The 5% would be regarded as “frictional” unemployment, meaning it consists either of people who have quit their old job because they have a new one but are not starting right away, or of project workers who routinely have small gaps between jobs.

That would, in fact, be quite worrying, since wage inflation acceleration–and therefore overall inflation acceleration–would be imminent.

The financial markets have not been focused on the very low unemployment percentage, however.  They have been, and continue to be, worried about the lack of wage gains–which, they argue, is evidence of continuing slack in the labor market.

Two recent contrarian thoughts:

–some are saying that the uptick in the unemployment rate is (finally) evidence that disheartened workers who have long since left the workforce (by stopping looking for work) are beginning to think that getting a job is now possible and are re-entering the workforce.  So it’s an early sign of a significantly better tone to the labor market.

I think this is possible.  Good news, if so.  The only question I have is how it could have taken over six years since the economy bottomed for this to occur.

–the Fed is beginning to argue that wage gains are actually greater than corporate reporting would lead us to believe.  The idea is that older, higher-paid workers are retiring and effectively being replaced by younger, lower-paid new hires.  This is something that always happens in the early stages of economic recovery.  Again, the question remains why wage-flattening has been going on for well over half a decade.

More on this topic tomorrow.


the February 2016 Employment Situation

The Bureau of Labor Statistics released its monthly Employment Situation report at 8:30est this morning.  The highlights:

–job gains for February came in at +242,000 new positions

–December and January figures were revised up a total of +30,000 jobs

–the unemployment rate remained steady at 4.9%

–wages, which had gained $.12 on a base of $25.26 per hour last month, fell by $.03 in February.  Although this is just one month, the figure threw some cold water on speculation generated by the strong January figure that wages–and therefore inflation–were finally beginning to rise at a more comfortable level after more than half a decade of mammoth monetary stimulation targeted in part at achieving this result.

All in all, good news.

Nevertheless, S&P futures, which spiked a bit on the announcement, are trading slightly below the pre-announcement level as I’m writing this.


One figure that caught my eye was the situation for the mining industry (including oil and gas as well as metals).  Since the employment peak for the sector in September 2014, mining has lost a total of -171,00 positions, including -19,000 last month.  Despite this, the economy as a whole has created around 4 million new jobs over the same period. Yes, Texas, Oklahoma and North Dakota… have been hurt by the sharp decline in oil prices, and yes, the oilfield-related jobs typically pay very high wages.  But I continue to find it hard to figure where the evidence can be for the persistent belief on Wall Street that somehow the decline of the oil and gas producing industry offsets most of the benefit to everyone else of lower hydrocarbon prices.  that just can’t be the case.

another aside

Window 10 was doing a massive update to my laptop as the jobs report was being made public.  So I turned on the TV to hear the news.  My fingers skipped over Bloomberg on the remote and went to CNBC.  I guess I’ve begun to admit to myself how stunningly bad Bloomberg has become at delivering informed financial comment.  (I assume this is the result of a new management emphasis on physical appearance rather than brain power, but I don’t know.)

In any event, CNBC is now clearly better.  Making Andrew Ross Sorkin the chief moderator certainly helps.  Conferencing in qualified outsiders does, too.  I’ve never cared for the comic relief provided by Rick Santelli, though.  I  find it hard to tell how much he actually believes of the nonsense he spouts, and I find it vaguely offensive.  But this may be tongue in cheek that I just don’t get.


the January 2016 Employment Situation

Earlier this morning the Bureau of Labor Statistics of the Labor Department released its monthly Employment Situation report for January.

job growth

The ES indicates that the economy added a net 151,000 new jobs during the month.  That’s roughly the number needed on average to absorb new job entrants, and it’s around the figure being reported each month last summer.  However, it falls short of the mammoth job addition figures achieved over the prior four months.  And it’s around 40,000 less than the consensus of Wall Street economists.

Revisions of prior months’ data didn’t move the needle much, either.  The ES numbers for November were revised up from +252,000 new jobs to +280,000; those for December were revised down from +292,000 to +262,000.  That’s a net of -2,000.


Wage growth might be a different story. Over the past year, average hourly wages grew by 2.5%, which is a little better than inflation but not terrific.  And it’s not really consistent with a low unemployment rate of around 5%.  For January, however, average hourly earnings rose by $.12 to $25.39.  Of course this is only one data point, but if sustained would amount to +5.7% annual growth.  This could be (stress on the could) an early indicator of rising wage inflation (the only kind that really counts in advanced economies).

market reaction

S&P futures immediately dropped from a slight positive to a small negative.  The dollar spiked up against the euro.  My guess is that these are just knee-jerk reactions.  If we want to make more of them than that, however, Wall Street’s read would seem to be that the US is finally starting to see strong real wage growth.  While that’s good for the economy, it also would mean less worry at the Fed about continuing to raise interest rates.  In early going, it would seem the latter is what traders have latched onto.

There’s certainly risk is extrapolating from one data point, especially one that has given false positive signals in the recent past.  Traders are likely judging that there’s little chance of the stock market running away to the upside, though, so there’s less risk to making the negative bet than would seem on the surface.

My reaction is that this is giving long term investors a chance to pick through the rubble to find cheap stocks with good long term prospects.

the December 2015 Employment Situation report

I thought I was pretty much through writing about the Labor Department’s monthly Employment Situation report.  After all, unemployment is down to 5%, a figure often associated with full employment.  And despite this, the country has been adding new jobs at a clip far higher than the 125,000 or so needed monthly to absorb new entrants into the labor force.

In recent months, however, two lines of thought (if “thought” is the right description) have emerged that argue the ES figures are misleadingly optimistic and that the US is actually on the cusp of recession.

–The first is that the sharp decline in the crude oil price is not an issue of too much supply but represents a falloff in demand,  presaging a drop in economic activity in the US.  The fact that there’s not a much empirical evidence in favor of this view hasn’t seemed to bother its adherents.

–The second is related.  Its claim is that the layoffs in petroleum- and other mining-related industries are of highly paid workers and dwarf the benefits to consumers (both individual and corporate) of lower commodity prices.  Again, imminent recession is the conclusion.


The December ES reports that the US economy added 292,000 jobs last month.  In addition, The October estimate was revised up from +298,000 jobs to +307,000 and the November result from +211,000 to +252,000.  That’s a whopping +284,000 new jobs a month last quarter.

For 2015 in total, the economy added 2.7 million jobs.

This ES also contains figures for the loss of jobs in extractive industries– a decline of -8,000 positions in December and one of -129,000 for the full year.

A related Labor Department report, JOLT (Job Openings and Labor Turnover) indicates that in October US employers had 5.4 million unfilled job openings, about a million higher than at the last economic peak in 2007.



Employment Situation, October 2015

The Bureau of Labor Statistics, part of the Labor Department, issued its monthly Employment Situation report for October this morning at 8:30 est.

After two below-trend reported jobs gains in August and September, the October figures were very much above trend, at a gain of +271,000 net new jobs.  Revisions to the prior two months were mildly positive, at a total of +12,000, but didn’t change the general picture of shifting into a lower economic gear painted by those ES reports.

The main significance of the October report, I think, is to reaffirm the health of the economy and to remove any hesitation the Fed might have had about raising interest rates slightly next month.

In futures trading, Wall Street is so far taking a ho-hum attitude to this news.  S&P futures have declined by about a quarter of a precent from where they were before the announcement.