June Jobs Report, with Details

July 6th, 2012 at 9:55 am

Payrolls grew by 80,000 last month and the unemployment rate was unchanged at 8.2% in a jobs report that confirms the slower trend in employment gains that showed up a few months ago. 

In order to get a better feel for the underlying trend, it’s useful to average across a few months.  With today’s report, we now have job data for the second quarter of the year–such quarterly numbers are less noisy and thus more reliable than the monthly ones.

Over the second quarter, payrolls are up an average of 75,000 per month, compared to 226,000 in the prior three months.  First quarter numbers may have been biased up by seasonal effects that failed to reflect the warm winter, so the lower second quarter gains may reflect some “payback.”

Still, I’m inclined to believe that we’ve actually settled into a slower trend, as shown in the figure, and that is really not where we need to be right now.  The slowdown is apparent across many industries, including manufacturing, which added 11,000 in June, but averaged 10,000 per month in the second quarter compared to 41,000 in the first.  Even so, continued job gains of even small magnitudes in our factory sector are extremely welcome. 

The fact that the unemployment rates been stuck north of 8% for months now also confirms the downshift diagnosis (see second figure below).

Today’s report suggests that the downshift looks real, and that’s what should be absorbing policy makers’ time and energy.  The labor market is, of course, not nearly the disaster that some partisans will claim today…we’re adding jobs, as has consistently been the case, month-after-month, for a few years now.  It’s just that we’re adding them too slowly.  Unfortunately, in a hotly contested election year, policy makers are more likely to target each other than to target the job market.

Details:

–consistent with the downshift, the number of involuntary part-timers has climbed steadily from 7.7 million in March to 8.2 million in June.

–after trending down fairly consistently since the official recession ended in mid-09, the share of unemployed as a result of layoffs climbed last quarter.

–though long-term unemployment ticked down from 42.8% of the unemployed in May to 41.9% in June, it remains highly elevated, as over five million people have been looking for work for more than six months.

–wages and hours were a bit of a bright spot: average weekly hours bumped up a tenth of an hour and weekly earnings are up 2.2% over last year’s level.  With inflation running below 2%, in part thanks to lower gas prices, that means real paychecks have increased buying power.

–as noted, the downshift in job growth appeared across most industries, which continue to add jobs but at a slower rate than earlier in the year (see manufacturing numbers above). 

–in the public sector, a significant decline of 14,000 in local education jobs was offset by gains elsewhere in local government; still the public sector as a whole was again down slightly (-4,000).  In all but three of the last 25 months, the public sector has shed jobs.

Source: BLS, my annotations (obviously…)

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2 comments in reply to "June Jobs Report, with Details"

  1. Stephen R Langenthal says:

    I heard you mention, on the PBS television news tonight, putting power lines underground
    Because I grew up and have always lived in New York, New York where all power, telephone and cable television lines are securely underground, I have been astounded for the past 60 years or so by the frequent, recurring and predictable downing of power lines all over the country.
    My letters to The New York Times on this topic were never printed although letters on other topics were.
    Last year I formed Power Underground, Inc., as a not for profit 501 C 3 charity, the purpose of which is to educate and agitate for putting power lines underground.
    We have a website wwww.powerunderground.org at which contributions may be made.
    Initially, those contributions will be used to fund a study at the Massachusetts Institute Of Technology to come up with accurate job creation, manufacturing stimulus, security and improvement in the visual environment that would result from undergrounding.
    Can we communicate? Can I help you on this issue? Any thoughts for MIT?


  2. Fred Donaldson says:

    We have to look more at the participation rate in the job market, which has to decline whenever there are fewer jobs added than the labor population growth requires.

    This is especially crucial when the new jobs are low paying, which means that spouses are not leaving the job market because the other spouse can afford to support the family without them.

    Instead, what we see is hours cuts, then lower wages, then layoffs, but no analysis of the income growth or decline of mom, dad and children.

    The games played with statistics turn me off to conclusions based on them, as austerians and politicians may have different propoganda goals and influence in the picking of data for public consumption.


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