By Hugh, who is a long-time commenter at Cfdtrade. . A complete archive of Hugh’s reports can be found .
Short Form: In seasonally adjusted terms, 165,000 jobs and unemployment dropping to 7.5% are OK, but not great results. At that job creation rate and taking population growth into account, it would take about 2 years to reduce by one million those currently unemployed. The BLS estimates current unemployment at 11.815 million. I calculate it at 20.542 million. So perhaps I should not say OK but rather next to nothing is being done to address the jobs situation.
In unadjusted terms, April was a good month, but then it should be. It is in the heart of the spring hiring season. Employment grew by 1,026,000, and 878,000 of that was full time employment. Even so, 2013 is shaping up to be worse than 2012 for employment and similar to the first half of 2012 for jobs.
In general, workers are not doing well. The jobs being created are mostly of poor quality. 19.5% of them are part time. Weekly hours and wages declined last month. And the BLS continues to underestimate the number of those without jobs by between 9 to 9.5 million.
So an OK month, but one which will do little to resolve the jobs crisis which is both a crisis of numbers and quality.
In April, the potential labor force as measured by the civilian non-institutional population over 16 increased 180,000 from 244.995 million to 245.175 million. Multiplying this by the seasonally adjusted employment ratio for April (58.6%) gives a rough estimate of the number of jobs needed to keep up with population growth: .586(180,000) = 105,000.
Seasonally adjusted (trend line), the labor force increased 210,000 from 155.028 million to 155.238 million. Unadjusted (actual), the labor force grew 227,000 from 154.512 million to 154.739 million.
The labor force participation rate, that is the ratio between the labor force as measured by the BLS and the potential labor force (NIP) remained unchanged from March both adjusted and unadjusted. Seasonally unadjusted, it was 63.3%. This is the lowest participation rate since May 1979, that is 34 years ago. Unadjusted, it was 63.1%, the lowest participation rate since May 1978 (35 years ago). There are 3 major factors weighing on these numbers: 1) the bad economy reducing the number of employed, 2) baby boomers beginning to retire out of the labor force also depressing employment, and 3) the BLS undercount of those it does not count as unemployed although they do not have a job but would work if a job was available.
Seasonally adjusted, the number of employed increased 293,000 from 143.286 million to 143.579 million. Unadjusted, employment grew 1,026,000 from 142.698 million to 143.724 million. That is a huge number. It finally exceeds the November 2012 Christmas season high of 143.549 million. However, the kicker here is that we need two more months of this kind of very large growth to match the last late year peak to mid-year peak growth from November 2011 to July 2012 (2.132 million). By comparison, we are currently only 175,000 employed beyond the November 2012 peak. All this is to say that while the unadjusted April number is very good, it is unlikely that the November 2012-July 2013 peak growth will come close to that which we saw November 2011-July 2012, as in it could well be 500,000-700,000 lower.
Seasonally adjusted, unemployment dropped 83,000 from 11.742 million to 11.659 million. Unadjusted, it fell 801,000 from 11.815 million to 11.014 million.
The degree of these drops is reflected in the unemployment rate which fell 0.1% seasonally adjusted to 7.5% (this is the official unemployment rate) and 0.5% unadjusted to 7.1%.
Seasonally adjusted, full time employment (35 or more hours/week) increased 150,000 to 116.053 million, and part time employment (1-34 hours/week) increased 107,000 to 27.549 million. [There is a discrepancy of +23,000 between the sum of these two numbers and the employed figure reported above.]
Unadjusted, full time employment increased 878,000 to 115.674 million and part time unemployment grew 148,000 to 28.050 million. [These sum correctly to the number for unadjusted employment.] The full time employment number is good. It means that only 14.4% of the increased employment in April came from part timers. This is better than the average. [These data comes from the A-8 table.]
The seasonally adjusted rate for part time work is 19.2%. The unadjusted rate of part time work is 19.5%.
However, the data from the A-9 table which breaks down part time work into for and not for economic reasons are at major odds with the A-8 data. Seasonally adjusted, part time work for economic reasons increased 278,000 to 7.916 million and for non-economic reasons, 163,000 to 18.908 million. [Reasons for part time work for non-economic reasons include childcare problems, family or personal obligations, school or training, retirement or Social Security limits on earnings, etc.] This would suggest that part time workers increased by 441,000 in April. Similarly, unadjusted, part time workers for economic reasons declined 25,000 to 7.709 million but increased 567,000 for non-economic reasons, netting to an increase of 542,000. The totals for these part time workers do not sum out to their A-8 counterparts, and their monthly increases contradict them. This is an ongoing problem, and I have no explanation for it.
The BLS’ broader measure of un- and under employment, the U-6, increased, seasonally adjusted 0.1% to 13.9%, and declined 0.5% to 13.4%, unadjusted.
Seasonally adjusted, the U-6 is composed of 11.659 million unemployed, 7.916 million involuntary part time workers, and 2.347 million of the marginally attached (those who have no job but looked for work in the last year but not the last month), or 21.922 million total, an increase of 216,000 from March.
[Standard note] The BLS has a restrictive, though internationally recognized, definition of unemployment, that is without a job but have looked for one in the last 4 weeks. The marginally attached are not counted as part of the labor force and their use in the U-6 is an indication that this is what the BLS considers its functional undercount to be.
The BLS also has a more extended category: Not in Labor Force, Want a Job Now (seasonally unadjusted). In April, this decreased 70,000 from 6.399 million to 6.329 million.
This category, however, does not reflect well actual movements in the economy. So I have developed a simple alternative to it. I calculate the size of where the labor force should be by multiplying the potential labor force of the NIP by a participation rate characteristic of a solid economic expansion (67%). The difference between this and the current labor force measures the size of the real BLS undercount, those who do not have jobs but would work if jobs were available to them. This then allows me to recalculate where real unemployment is and where real un- and under employment (disemployment) is.
.67(245.175 million) = 164.267 million (where the labor force should be)
164.267 million — 155.238 million = 9.029 million, a decrease of 90,000 from March
164.267 million — 154.739 million = 9.528 million, a decrease of 107,000
Real Trend Unemployment (that is seasonally adjusted) :
11.659 million (U-3 unemployment) + 9.029 million (undercount) = 20.688 million, down 173,000
20.688 million / 164.267 million = 12.6% down0.1%
Real Unemployment Now (i.e. seasonally unadjusted) :
11.014 million (U-3 unemployment) + 9.528 million (undercount) = 20.542 million, down 908,000
20.542 million / 164.267 million = 12.5% down0.6%
Real Trend Disemployment:
Real Trend Unemployment + involuntary part time workers seasonally adjusted = 20.688 million + 7.916 million = 28.604 million, up 105,000
28.604 million / 164.267 million = 17.4% unchanged
Real Disemployment Now:
Real Unemployment Now + involuntary part time workers seasonally unadjusted = 20.542 million + 7.709 million = 28.251 million, down 933,000
28.251 million / 164.267 million = 17.2% down 0.6%
The long term unemployed, as defined by the BLS (active job seekers out of work 6 months or more) decreased 258,000 to 4.353 million. The long term unemployed account for 37.3% (down 2.0%) of the U-3 unemployed.
The improvement in the unemployment rate came from across the board decreases. White unemployment was unchanged at 6.7%. African American unemployment declined 0.1% to 13.2%. Black teen (16-19 years old) increased 6.7% to 40.5%. White teen unemployment was 21.8%.
In the business survey, the private sector added 176,000 jobs (seasonally adjusted). Government lost 11,000, netting a gain of 165,000 for a total 135.474 million. In addition, the Feburary jobs number (seasonally adjusted) was revised upward 64,000 to 332,000 and March, 50,000 to 138,000.
Unadjusted, private sector jobs increased 937,000 in April to 113.232 million. Government lost 5,000 to 22.262 million. The sum of these is 932,000, yielding 135.494 million total jobs. Unlike the employment numbers, the jobs figures look on track to meet the November peak of the previous year as they usually do in June or July (The November 2012 peak was 135.636 million.)
Unadjusted construction added 160,000 jobs, but manufacturing only added 15,000. Private service providing grew 764,000, of which retail added 108,000, and food and drinking places, 202,000. In other words, many of the jobs created in April were in low wage, poor quality sectors.
Average weekly hours for all employees fell 0.2 hours to 34.4. As a consequence, although hourly earnings increased 4 cents an hour, weekly earnings decreased $3.39 to $821.13.
Much the same was seen for production and nonsupervisory employees (blue collar and clerical workers). The work week declined 0.1 hour to 33.7 hours, hourly wages increased 2 cents to $20.06, but weekly wages dropped $1.33 to $676.02.
Household data (Employment/unemployment)
Statistical significance: +/ – 400,000
The A tables: http://www.bls.gov/cps/cpsatabs.htm
A 1 for most information and categories
A 2 Unemployment by race
A 8 Part time workers
A 9 Full time workers
A 12 Duration of unemployment
A 15 U 6 un- and under employment
A 16 Persons not in labor force
Establishment date (jobs)
Statistical significance: +/ – 100,000
The B tables: http://www.bls.gov/ces/cesbtabs.htm
B 1 Total jobs and jobs by industry/type
B 2 Weekly hours, all employees
B 3 Hourly and weekly earnings, all employees
B 6 Weekly hours, blue collar
B 7 Hourly and weekly earnings, blue collar