April 2024 Employment Report

Click image for larger view

The Bureau of Labor Statistics’ (BLS) establishment survey showed nonfarm employers adding 175,000 jobs in April -- well below not only the +243,000 expected but also the bottom end of the consensus range (+190,000). Also, February and March 2024 employment changes were revised down by a combined 22,000 (February: -34,000; March: +12,000).

Meanwhile, the unemployment rate (based upon the BLS’s household survey) ticked up 0.1 percentage point, to 3.9%, as the unemployed (+63,000) comprised over 72% of growth in the labor force (+87,000). 

Click image for larger view

Observations from the employment reports include:

* The two surveys were once again in relative agreement, which supports their credibility. That said, seven jobs were allegedly created for each additional person employed, which seems implausible.

* Goods-producing industries gained 14,000 jobs; service providers: +161,000. Job gains occurred in health care (56,000), social assistance (31,000), and transportation and warehousing (22,000). Job losses occurred in temporary help services (-16,400) and information (-8,000). Total nonfarm employment (158.3 million) is now 6.0 million jobs above its pre-pandemic level in February 2020 (private sector: +5.57 million; public sector: +404,000). Nonetheless, employment is perhaps 4.5 million below its potential if accounting for growth in the working-age population since January 2006.

Manufacturing jobs grew (+8,000) as a gain in durable goods (+1,000) rounded out the change in nondurables (+7,000). That result seems to conflict with the change in the Institute for Supply Management (ISM) manufacturing employment subindex, which rose closer to breakeven in April. Wood products manufacturing added 1,400 jobs (ISM unchanged); paper manufacturing: +700 (ISM decreased); construction: +9,000 (ISM increased).

Click image for larger view

* The number of employment-age persons not in the labor force rose (+94,000) to 100.1 million (nearly 4.9 million above the February 2020 mark). Because the working-age civilian population expanded (+87,000) more quickly than the number of employed (+25,000), the employment-population ratio (EPR) ticked down fractionally to 60.2%, which is 0.9PP below its February 2020 level. 

Click image for larger view

* Also, although the working-age civilian population rose by 182,000 while the labor force expanded by just 87,000, the labor force participation rate was unchanged at 62.7%. Average hourly earnings of all private employees advanced by $0.07 (to $34.75), but the year-over-year increase decelerated to +3.2%. Because the average workweek for all employees on private nonfarm payrolls shrank to 34.3 hours, average weekly earnings fell (-$1.06) to $1,191.93 (+1.7% YoY). With the consumer price index running at an annual growth rate of +3.5% in March, the average worker appears to have lost purchasing power. 

Click image for larger view

* Full-time workers jumped (+949,000) to 133.9 million; there are now nearly 3.1 million more full-time jobs than in February 2020. For perspective, however, the non-institutional working-age civilian population has expanded by 8.4 million during that period. Workers employed part time for economic reasons (shown in the graph above) -- e.g., slack work or business conditions, or could find only part-time work -- rose by 161,000, while those working part time for non-economic reasons slumped (-649,000). Multiple-job holders: -93,000; there are now 362,000 more multi-job holders than in February 2020. 

Click image for larger view

For a “sanity test” of the job numbers, we consult employment withholding/FICA taxes published by the U.S. Treasury. Although “noisy” and highly seasonal, the data show the amount withheld in April decreased by $43.0 billion, to $276.3 billion (-13.6% MoM; +16.5% YoY). To reduce some of the monthly volatility and determine broader trends, we average the most recent three months of data and estimate a percentage change from the same months in the previous year; the average of the three months ending April was up 8.3% from the year-earlier average.

The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.

March 2024 Employment Report

Click image for larger view

The Bureau of Labor Statistics’ (BLS) establishment survey showed nonfarm employers adding 303,000 jobs in March -- higher than the +200,000 expected and above the top end of the consensus range (+230,000). Also, January and February 2024 employment changes were revised up by a combined 22,000 (January: +27,000; February: -5,000).

Meanwhile, the unemployment rate (based upon the BLS’s household survey) ticked down 0.1 percentage point, to 3.8%, as growth in the number of employed (+498,000) outpaced that of the labor force (+469,000). 

Click image for larger view

Observations from the employment reports include:

* For a change the two surveys were in relative agreement, which supports their credibility.

* Goods-producing industries gained 42,000 jobs; service providers: +261,000. Job gains occurred in health care (+72,000), government (+71,000), construction (+39,000), and leisure and hospitality (+49,000). Total nonfarm employment (157.8 million) is now 5.8 million jobs above its pre-pandemic level in February 2020 (private sector: +5.42 million; public sector: +403,000). Nonetheless, employment is perhaps 4.5 million below its potential if accounting for growth in the working-age population since January 2006.

Manufacturing jobs were unchanged as a gain in durable goods (+4,000) was offset by a loss in nondurables. That result may be consistent with the change in the Institute for Supply Management (ISM) manufacturing employment subindex, which rose closer to breakeven in March. Wood products manufacturing added 400 jobs (ISM unchanged); paper manufacturing: +400 (ISM decreased); construction: +39,000 (ISM increased).

Click image for larger view

* The number of employment-age persons not in the labor force fell (-296,000) to 100.0 million (nearly 4.8 million above February 2020). Because the working-age civilian population expanded (+173,000) while the number of employed rose (+498,000), the employment-population ratio (EPR) ticked up fractionally to 60.3%, which is 0.8PP below its February 2020 level. 

Click image for larger view

* Also, because the working-age civilian population rose by 173,000 while the labor force expanded by 469,000, the labor force participation rate also rose to 62.7%. Average hourly earnings of all private employees advanced by $0.12 (to $34.69), but the year-over-year increase decelerated to +4.1%. Because the average workweek for all employees on private nonfarm payrolls lengthened to 34.4 hours, average weekly earnings rose (+$7.59) to $1,193.34 (+4.1% YoY). With the consumer price index running at an annual growth rate of +3.2% in February, the average worker appears to have gained purchasing power. 

Click image for larger view

* Full-time workers slipped (-5,000) to 132.9 million; there are now over 2.1 million more full-time jobs than in February 2020. For perspective, however, the non-institutional working-age civilian population has expanded by 8.3 million during that period. Workers employed part time for economic reasons (shown in the graph above) -- e.g., slack work or business conditions, or could find only part-time work -- dipped by 68,000, while those working part time for non-economic reasons jumped (+593,000). Multiple-job holders: +217,000; there are now 455,000 more multi-job holders than in February 2020. 

Click image for larger view

For a “sanity test” of the job numbers, we consult employment withholding/FICA taxes published by the U.S. Treasury. Although “noisy” and highly seasonal, the data show the amount withheld in March increased by $41.0 billion, to $319.7 billion (+14.7% MoM; +2.2% YoY). To reduce some of the monthly volatility and determine broader trends, we average the most recent three months of data and estimate a percentage change from the same months in the previous year; the average of the three months ending March was up 3.8% from the year-earlier average.

The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.

February 2024 Employment Report

Click image for larger view

The Bureau of Labor Statistics’ (BLS) establishment survey showed nonfarm employers adding 275,000 jobs in February -- higher than the +190,000 expected and above the top end of the consensus range (+260,000). Also, December 2023 and January 2024 employment changes were revised down by a combined 167,000 (December: -43,000; January: -124,000).

Meanwhile, the unemployment rate (based upon the BLS’s household survey) ticked up 0.2 percentage point, to 3.9%, as the labor force expanded (+150,000) but the number of employed fell (-184,000). 

Click image for larger view

Observations from the employment reports include:

* The two surveys once again diverged, which erodes their credibility. While the establishment report showed the addition of 275,000 jobs, the household report indicated the number of employed fell by 184,000.

* Goods-producing industries gained 19,000 jobs; service providers: +256,000. Job gains occurred in health care (+67,000), government (+52,000), food services and drinking places (+42,000), social assistance (+24,000), and in transportation and warehousing (+20,000). Employment declined in the temporary help services (-15,400). Total nonfarm employment (157.8 million) is now nearly 5.5 million jobs above its pre-pandemic level in February 2020 (private sector: +5.19 million; public sector: +313,000). Nonetheless, employment is perhaps 4.7 million below its potential if accounting for growth in the working-age population since January 2006.

Manufacturing lost 4,000 jobs (led by nondurable goods: -6,000 -- especially chemical manufacturing: -2,100). That result seems to be consistent with the change in the Institute for Supply Management (ISM) manufacturing employment subindex, which fell further into contraction (to 45.9) in February. Wood products manufacturing added 1,600 jobs (ISM fell); paper manufacturing: -900 (ISM decreased); construction: +23,000 (ISM increased).

Click image for larger view

* The number of employment-age persons not in the labor force edged up (+20,000) to 100.3 million (nearly 5.1 million above February 2020). Because the working-age civilian population expanded (+171,000) while the number of employed fell (-184,000), the employment-population ratio (EPR) ticked down fractionally to 60.1%, which is 1.0PP below its February 2020 level. 

Click image for larger view

* Also, because the working-age civilian population rose by 171,000 while the labor force expanded by 150,000, the labor force participation rate was unchanged at 62.5%. Average hourly earnings of all private employees nudged up by $0.05 (to $34.57), and the year-over-year increase accelerated to +4.2%. Because the average workweek for all employees on private nonfarm payrolls lengthened to 34.3 hours, average weekly earnings rose (+$5.17) to $1,185.75 (+3.6% YoY). With the consumer price index running at an annual rate of +3.1% in January, the average worker appears to have gained purchasing power. 

Click image for larger view

* Full-time workers receded (-187,000) to 132.9 million; there are now over 2.1 million more full-time jobs than in February 2020. For perspective, however, the non-institutional working-age civilian population has expanded by 8.1 million during that period. Workers employed part time for economic reasons (shown in the graph above) -- e.g., slack work or business conditions, or could find only part-time work -- slipped by 46,000, while those working part time for non-economic reasons climbed (+153,000). Multiple-job holders: -13,000; there are now 238,000 more multi-job holders than in February 2020. 

Click image for larger view

For a “sanity test” of the job numbers, we consult employment withholding/FICA taxes published by the U.S. Treasury. Although “noisy” and highly seasonal, the data show the amount withheld in February retreated by $14.4 billion, to $278.7 billion (-4.9% MoM; +8.2% YoY). To reduce some of the monthly volatility and determine broader trends, we average the most recent three months of data and estimate a percentage change from the same months in the previous year; the average of the three months ending February was down 2.6% from the year-earlier average.

The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.

January 2024 Employment Report

Click image for larger view

The Bureau of Labor Statistics’ (BLS) establishment survey showed nonfarm employers adding 353,000 jobs in January -- more than double the +170,000 expected and above even the highest analyst prediction (+300,000). Also, November and December 2023 employment changes were revised up by a combined 126,000 (November: +9,000; December: +117,000 -- from the original +216,000 to the revised +333,000)..

Meanwhile, the unemployment rate (based upon the BLS’s household survey) was unchanged at 3.7%, as a drop in the number of unemployed (-144,000) was essentially matched by a contraction of the labor force (-175,000). 

Click image for larger view

Observations from the employment reports include:

* The establishment survey data were revised as a result of the annual benchmarking process and the updating of seasonal adjustment factors; we observed changes as far back as January 1990. Also, household survey data for January 2024 reflect updated population estimates, which adversely affect the comparability of household data series over time; consequently, comparisons to December 2023 or earlier time periods should be taken with a proverbial “grain of salt.” That said, the two surveys once again diverged widely, which erodes their credibility. While the establishment report showed the addition of 353,000 jobs, the household report indicated the number of employed fell by 31,00.

* Goods-producing industries gained 28,000 jobs; service providers: +325,000. Job gains occurred in professional and business services (+74,000), health care (+70,300), retail trade (+45,200), and social assistance (+30,100). Employment declined in the mining, quarrying, and oil and gas extraction industry (-5,000). Total nonfarm employment (157.7 million) is now nearly 5.4 million jobs above its pre-pandemic level in February 2020 (private sector: +5.17 million; public sector: +224,000). Nonetheless, employment is perhaps 4.7 million below its potential if accounting for growth in the working-age population since January 2006.

Manufacturing added 23,000 jobs (led by nondurable goods: +19,000 -- especially chemical manufacturing: +6,900). That result seems to be at odds with the change in the Institute for Supply Management (ISM) manufacturing employment subindex, which contracted more quickly (to 47.1) in January. Wood products manufacturing shed 900 jobs (ISM was unchanged); paper manufacturing: -1,800 (ISM decreased); construction: +11,000 (ISM not yet published).

Click image for larger view

* The number of employment-age persons not in the labor force fell (-275,000) to 100.3 million (5.0 million above February 2020). Because the working-age civilian population contracted (-175,000) while the number of employed edged lower (-31,000), the employment-population ratio (EPR) inched up to 60.2%, which is 0.9PP below its February 2020 level. 

Click image for larger view

* Also, because the working-age civilian population fell by 451,000 while the labor force shrank by 175,000, the labor force participation rate was unchanged at 62.5%. Average hourly earnings of all private employees nudged up by $0.19 (to $34.55), and the year-over-year increase decelerated to +3.9%. Because the average workweek for all employees on private nonfarm payrolls decreased to 34.1 hours, average weekly earnings fell (-$0.39) to $1,178.16 (+1.2% YoY). With the consumer price index running at an annual rate of +3.4% in December, the average worker likely lost purchasing power. 

Click image for larger view

* Full-time workers ticked lower (-63,000) to 133.1 million; there are now over 2.3 million more full-time jobs than in February 2020. For perspective, however, the non-institutional working-age civilian population has expanded by 7.9 million during that period. Workers employed part time for economic reasons (shown in the graph above) -- e.g., slack work or business conditions, or could find only part-time work -- rose by 211,000, while those working part time for non-economic reasons fell (-302,000). Multiple-job holders: -293,000.

Click image for larger view

For a “sanity test” of the job numbers, we consult employment withholding/FICA taxes published by the U.S. Treasury. Although “noisy” and highly seasonal, the data show the amount withheld in January ticked up by $2.4 billion, to $290.1 billion (+0.8% MoM; +1.7% YoY). To reduce some of the monthly volatility and determine broader trends, we average the most recent three months of data and estimate a percentage change from the same months in the previous year; the average of the three months ending January was down 4.7% from the year-earlier average.

The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.

December 2023 Employment Report

Click image for larger view

The Bureau of Labor Statistics’ (BLS) establishment survey showed nonfarm employers adding 216,000 jobs in December (+164,000 expected). Also, October and November 2023 employment changes were revised down by a combined 71,000 (October: -45,000; November: -26,000). Except for July, job gains of all months in 2023 have been revised lower.

Meanwhile, the unemployment rate (based upon the BLS’s household survey) was unchanged at 3.7%, as a drop in the number of employed (-683,000) was essentially matched by a contraction of the labor force (-676,000). 

Click image for larger view

Observations from the employment reports include:

* Once again, the two surveys diverged, which erodes their credibility. While the employment report showed the addition of 216,000 jobs, the household report indicated the number of employed fell by 683,00.

* Goods-producing industries gained 22,000 jobs; service providers: +194,000. Employment continued to trend up in government (+52,000), health care (+38,000), social assistance (+21,000), and construction (+17,000), while transportation and warehousing lost jobs (-23,000). Total nonfarm employment (157.2 million) is now nearly 4.9 million jobs above its pre-pandemic level in February 2020 (private sector: +4.73 million; public sector: +132,000). Nonetheless, employment is perhaps 5.1 million below its potential if accounting for growth in the working-age population since January 2006.

Manufacturing added 6,000 jobs (led by durable goods: +8,000, of which miscellaneous manufacturing; 3,200). That result may agree with the change in the Institute for Supply Management (ISM) manufacturing employment subindex, which moved closer to breakeven (48.1) in December. Wood products manufacturing shed 2,100 jobs (ISM was unchanged); paper manufacturing: -100 (ISM decreased); construction: +17,000 (ISM increased).

Click image for larger view

* The number of employment-age persons not in the labor force jumped (+845,000) to 100.5 million -- the highest since March 2021 and 5.3 million above February 2020. Because the working-age civilian population expanded (+169,000) while the number of employed fell (-683,000), the employment-population ratio (EPR) declined to 60.1%, which is 1.0PP below its February 2020 level. 

Click image for larger view

* Also, because the working-age civilian population grew by 169,000 while the labor force shrank by 676,000, the labor force participation rate fell to 62.5%. Average hourly earnings of all private employees nudged up by $0.15 (to $34.27), and the year-over-year increase edged up fractionally to +4.1%. Because the average workweek for all employees on private nonfarm payrolls decreased to 34.3 hours, average weekly earnings rose (+$1.73) to $1,175.46 (+4.4% YoY). With the consumer price index running at an annual rate of +3.1% in November, the average worker appears likely to have gained a bit of purchasing power. 

Click image for larger view

* Full-time workers slumped (-1.5 million) to 133.2 million; there are now nearly 2.4 million more full-time jobs than in February 2020. For perspective, however, the non-institutional working-age civilian population has risen by 8.4 million during that period. Workers employed part time for economic reasons (shown in the graph above) -- e.g., slack work or business conditions, or could find only part-time work -- rose by 217,000, while those working part time for non-economic reasons jumped (+579,000); total part-timers are at their highest since March 2018. Multiple-job holders: +222,000 -- to a record 8.6 million. 

Click image for larger view

For a “sanity test” of the job numbers, we consult employment withholding/FICA taxes published by the U.S. Treasury. Although “noisy” and highly seasonal, the data show the amount withheld in December spiked by $50.0 billion, to $290.6 billion (+20.8% MoM; but -14.5% YoY). To reduce some of the monthly volatility and determine broader trends, we average the most recent three months of data and estimate a percentage change from the same months in the previous year; the average of the three months ending December was down 4.9% from the year-earlier average.

The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.

November 2023 Employment Report

Click image for larger view

The Bureau of Labor Statistics’ (BLS) establishment survey showed nonfarm employers adding 199,000 jobs in November (+180,000 expected). Also, September and October 2023 employment changes were revised down by a combined 35,000 (September: -35,000; October unchanged). Except for July and October, job gains of all months in 2023 have been revised lower.

Meanwhile, the unemployment rate (based upon the BLS’s household survey) edged down to 3.7%, as growth in the number of employed (+747,000) exceeded that of the labor force (+532,000). 

Click image for larger view

Observations from the employment reports include:

* For a change, the two surveys moved in parallel, which augments their credibility. Also, the CES (business birth/death model) adjustment (+4,000) was very modest, and the seasonal adjustment was slightly smaller than the average November of the prior decade. It is worth noting, however, that the numbers included about 47,000 formerly striking auto and motion picture workers returning to work.

* Goods-producing industries gained 29,000 jobs; service providers: +170,000. Job gains occurred in health care (+76,800) and government (+49,000). Employment also increased in manufacturing (+28,000), reflecting the return of workers from a strike. Employment in retail trade declined (-38,400). Total nonfarm employment (157.1 million) is now 4.7 million jobs above its pre-pandemic level in February 2020 (private sector: +4.6 million; public sector: +96,000). Nonetheless, employment is perhaps 5.1 million below its potential if accounting for growth in the working-age population since January 2006.

As mentioned above, manufacturing added 49,000 jobs (led by durable goods: +36,000), thanks to an increase of 30,000 in motor vehicles and parts consistent with the end of strike activity. That result disagrees with the change in the Institute for Supply Management (ISM) manufacturing employment subindex, which contracted further (to 45.8) in November. Wood products manufacturing gained 1,000 jobs (ISM was unchanged); paper manufacturing: -500 (ISM decreased); construction: +2,000 (ISM increased).

Click image for larger view

* The number of employment-age persons not in the labor force fell (-352,000) to 99.6 million; that level is 4.4 million higher than in February 2020. Because the working-age civilian population expanded (+180,000) more slowly than the number of employed (+747,000), the employment-population ratio (EPR) rose to 60.5%, which is 0.6PP below its February 2020 level. 

Click image for larger view

* Also, because the working-age civilian population grew by 180,000 while the labor force expanded by 532,000, the labor force participation rate increased fractionally to 62.8%. Average hourly earnings of all private employees nudged up by $0.12 (to $34.10), and the year-over-year increase was unchanged at +4.0%. Because the average workweek for all employees on private nonfarm payrolls edged up to 34.4 hours, average weekly earnings rose (+$7.53) to $1,173.04 (+4.0% YoY). With the consumer price index running at an annual rate of +3.2% in October, the average worker appears likely to have gained a bit of purchasing power. 

Click image for larger view

* Full-time workers rose (+347,000) to 134.8 million; there are now 4.1 million more full-time jobs than in February 2020. For perspective, however, the non-institutional working-age civilian population has risen by 8.2 million during that period. Workers employed part time for economic reasons (shown in the graph above) -- e.g., slack work or business conditions, or could find only part-time work -- fell by 295,000, while those working part time for non-economic reasons jumped (+323,000); multiple-job holders: -15,000. 

Click image for larger view

For a “sanity test” of the job numbers, we consult employment withholding/FICA taxes published by the U.S. Treasury. Although “noisy” and highly seasonal, the data show the amount withheld in November retreated by $11.8 billion, to $240.7 billion (-4.7% MoM; +1.3% YoY). To reduce some of the monthly volatility and determine broader trends, we average the most recent three months of data and estimate a percentage change from the same months in the previous year; the average of the three months ending November was up 1.0% from the year-earlier average.

The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.

October 2023 Employment Report

Click image for larger view

The Bureau of Labor Statistics’ (BLS) establishment survey showed nonfarm employers adding 150,000 jobs in October (well below the 179,000 expected) -- a drop of more than 50% from the original September print, and the second-smallest gain of 2023. Also, August and September 2023 employment changes were revised down by a combined 101,000 (August: -62,000; September: -39,000). With these revisions, only July’s employment gain remains higher than the original estimate; all other months of 2023 have been revised lower.

Meanwhile, the unemployment rate (based upon the BLS’s household survey) ticked up to 3.9%, as the retreat in the number of employed (-348,000) exceeded the labor-force shrinkage of (-201,000). 

Click image for larger view

Observations from the employment reports include:

* The two surveys diverged, which erodes their credibility. In addition, the CES (business birth/death model) adjustment (+412,000) was the second largest in history -- surpassed by only October 2022’s +511,000; i.e., the CES data implies the second-fastest rate of business formation (or at least hiring) in history. Also, although the seasonal adjustment was a record high, it was smaller than might have been expected (+940,000) based on a trend of October adjustments encompassing the prior decade.

* Goods-producing industries lost 11,000 jobs; service providers: +161,000. Job gains occurred in health care (+58,400), government (+51,000), and social assistance (+18,800). Total nonfarm employment (156.9 million) is now nearly 4.6 million jobs above its pre-pandemic level in February 2020 (private sector: +4.5 million; public sector: +21,000). Nonetheless, employment is perhaps 5.1 million below its potential if accounting for growth in the working-age population since January 2006.

Manufacturing shed 35,000 jobs (led by durable goods: -36,000), thanks to a decline of 33,000 in motor vehicles and parts that was largely due to strike activity. That result may be consistent with the change in the Institute for Supply Management (ISM) manufacturing employment subindex, which fell back into contraction (46.8) in October. Wood products manufacturing lost 200 jobs (ISM was unchanged); paper manufacturing: +600 (ISM decreased); construction: +23,000 (ISM increased).

Click image for larger view

* The number of employment-age persons not in the labor force jumped (+416,000) to 99.9 million; that level is 4.7 million higher than in February 2020. Because the working-age civilian population expanded (+214,000) while the number of employed shrank (-348,000), the employment-population ratio (EPR) dipped to 60.2%, which is 0.9PP below its February 2020 level. 

Click image for larger view

* Also, because the working-age civilian population grew by 214,000 while the labor force shrank by 201,000, the labor force participation rate decreased fractionally to 62.7%. Average hourly earnings of all private employees nudged up by $0.07 (to $34.00), and the year-over-year increase decelerated to +4.0%. However, because the average workweek for all employees on private nonfarm payrolls edged down to 34.3 hours, average weekly earnings fell (-$0.99) to $1,166.20 (+3.4% YoY). With the consumer price index running at an annual rate of +3.7% in September, the average worker appears likely to have once again fallen behind in terms of purchasing power. 

Click image for larger view

* Full-time workers rose (+326,000) to 134.5 million; there are now 3.7 million more full-time jobs than in February 2020. For perspective, however, the non-institutional working-age civilian population has risen by 8.0 million during that period. Workers employed part time for economic reasons (shown in the graph above) -- e.g., slack work or business conditions, or could find only part-time work -- jumped by 218,000, while those working part time for non-economic reasons dropped (-613,000); multiple-job holders: +205,000. 

Click image for larger view

For a “sanity test” of the job numbers, we consult employment withholding/FICA taxes published by the U.S. Treasury. Although “noisy” and highly seasonal, the data show the amount withheld in October advanced by $16.77 billion, to $252.5 billion (+7.1% MoM; +2.1% YoY). To reduce some of the monthly volatility and determine broader trends, we average the most recent three months of data and estimate a percentage change from the same months in the previous year; the average of the three months ending October was down 1.6% from the year-earlier average.

The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.

September 2023 Employment Report

Click image for larger view

The Bureau of Labor Statistics’ (BLS) establishment survey showed nonfarm employers adding 336,000 jobs in September (over double the 160,000 expected). Also, July and August 2023 employment changes were revised up by a combined 119,000 (July: +79,000; August: +40,000). This breaks the trend, noted in prior posts, of revising employment gains lower for every historical month in 2023.

Meanwhile, the unemployment rate (based upon the BLS’s household survey) was unchanged at 3.8%, as labor-force expansion of 90,000 was essentially matched by +86,000 becoming employed. 

Click image for larger view

Observations from the employment reports include:

* Although the two surveys were directionally consistent, jobs gains were far greater than the increase in employed workers.

* Goods-producing industries added 29,000 jobs; service providers: +307,000. Job gains occurred in leisure and hospitality (+96,000); government (+73,000); health care (+40,900); professional, scientific, and technical services (+29,000); and social assistance (+25,000). Total nonfarm employment (156.9 million) is now 4.5 million jobs above its pre-pandemic level in February 2020 (private sector: +4.5 million; public sector: -9,000). Nonetheless, employment is also perhaps 5.1 million below its potential if accounting for growth in the working-age population since January 2006.

Manufacturing gained 17,000 jobs, led by durable goods (+13,000). That result may be consistent with the change in the Institute for Supply Management (ISM) manufacturing employment subindex, which moved back to expansion (to 51.2) in September. Wood products manufacturing gained 1,400 jobs (ISM was unchanged); paper manufacturing: +1,600 (ISM unchanged); construction: +11,000 (ISM increased).

Click image for larger view

* The number of employment-age persons not in the labor force rose (+124,000) to 99.5 million; that level is 4.3 million higher than in February 2020. Although working-age civilian population growth (+215,000) outpaced growth in the number of employed (+86,000), the employment-population ratio (EPR) remained at 60.4%, which is 0.7PP below its February 2020 level. 

Click image for larger view

* Also, although the working-age civilian population grew by 215,000 while the labor force expanded by 90,000, the labor force participation rate was unchanged at 62.8%. Average hourly earnings of all private employees nudged up by $0.07 (to $33.88), and the year-over-year increase decelerated to +4.2%. Despite the average workweek for all employees on private nonfarm payrolls being unchanged at 34.4 hours, average weekly earnings rose (+$2.41) to $1,165.47 (+3.5% YoY). With the consumer price index running at an annual rate of +3.7% in August, the average worker may be about breaking even in terms of purchasing power. 

Click image for larger view

* Full-time workers slipped (-22,000) to 134.2 million; there are now 3.4 million more full-time jobs than in February 2020. For perspective, however, the non-institutional working-age civilian population has risen by nearly 7.8 million during that period. Workers employed part time for economic reasons (shown in the graph above) -- e.g., slack work or business conditions, or could find only part-time work -- fell by 156,000, while those working part time for non-economic reasons jumped (+177,000); multiple-job holders: +123,000. 

Click image for larger view

For a “sanity test” of the job numbers, we consult employment withholding/FICA taxes published by the U.S. Treasury. Although “noisy” and highly seasonal, the data show the amount withheld in September retreated by $7.04 billion, to $235.7 billion (-2.9% MoM; -0.5% YoY). To reduce some of the monthly volatility and determine broader trends, we average the most recent three months of data and estimate a percentage change from the same months in the previous year; the average of the three months ending September was up 0.3% from the year-earlier average.

The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.

August 2023 Employment Report

Click image for larger view

The Bureau of Labor Statistics’ (BLS) establishment survey showed nonfarm employers adding 187,000 jobs in August (170,000 expected). June and July 2023 employment changes were revised down by a combined 110,000 (June: -80,000; July: -30,000). Once again, employment gains have now been revised lower for every historical month in 2023; particularly noteworthy, June was originally reported as +209,000 but now stands at +105,000 (versus original expectations of 213,000).

Meanwhile, the unemployment rate (based upon the BLS’s household survey) jumped by 0.3 percentage point (PP) to 3.8%, as the labor force expanded by 736,000 but only 222,000 became employed. 

Click image for larger view

Observations from the employment reports include:

* Goods-producing industries added 36,000 jobs; service providers: +151,000. Employment continued to trend up in health care (+70,900), leisure and hospitality (+40,000), social assistance (+26,400), and construction (+22,000). Employment in transportation and warehousing declined (-34,200). Total nonfarm employment (156.3 million) is now 4.0 million jobs above its pre-pandemic level in February 2020 (private sector: +4.3 million; public sector: -213,000). That said, employment is also perhaps 5.4 million below its potential if accounting for growth in the working-age population since January 2006.

Manufacturing gained 16,000 jobs, led by durable goods (+12,000). That result may be consistent with the change in the Institute for Supply Management (ISM) manufacturing employment subindex, which contracted more slowly (rising from 44.4 to 48.5) in August. Wood products manufacturing gained 3,100 jobs (ISM was unchanged); paper manufacturing: -400 (ISM decreased); construction: +22,000 (ISM not yet reported).

Click image for larger view

* The number of employment-age persons not in the labor force fell (-525,000) to 99.4 million; that level is 4.2 million higher than in February 2020. Because growth in the number of employed (+222,000) barely outpaced working-age civilian population growth (+211,000), the employment-population ratio (EPR) remained at 60.4%, which is 0.7PP below its February 2020 level. 

Click image for larger view

* Because the working-age civilian population grew by 211,000 while the labor force expanded by 736,000, the labor force participation rate rose to 62.8%. Average hourly earnings of all private employees nudged up by $0.08 (to $33.82), and the year-over-year increase decelerated to +4.2%. Despite the average workweek for all employees on private nonfarm payrolls lengthening to 34.4 hours, average weekly earnings rose (+$6.13) to $1,163.41 (+3.9% YoY). With the consumer price index running at an annual rate of +3.2% in July, the average worker appears to have gained a bit of purchasing power. Average hourly wages have generally lagged CPI since April 2021; average weekly wages since June 2021.

Click image for larger view

* Full-time workers fell (-85,000) to 134.2 million; there are now 3.4 million more full-time jobs than in February 2020. For perspective, however, the non-institutional working-age civilian population has risen by nearly 7.6 million during that period. Workers employed part time for economic reasons (shown in the graph above) -- e.g., slack work or business conditions, or could find only part-time work -- jumped by 221,000, while those working part time for non-economic reasons inched higher (+4,000); multiple-job holders: -85,000. 

Click image for larger view

For a “sanity test” of the job numbers, we consult employment withholding/FICA taxes published by the U.S. Treasury. Although “noisy” and highly seasonal, the data show the amount withheld in August edged up by $0.25 billion, to $242.8 billion (+0.1% MoM; -4.2% YoY). To reduce some of the monthly volatility and determine broader trends, we average the most recent three months of data and estimate a percentage change from the same months in the previous year; the average of the three months ending August was up 1.0% from the year-earlier average.

The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.