The bottom line of the May employment numbers

Summary: The strong May employment number confirms what I’ve said in previous reports about the economy, casting doubt on the bears’ confident forecasts of an imminent recession. The economy was slow in Q1, but the data so far for Q2 paints a stronger if still mixed picture. {1st of 2 posts today.}

#BLS Keep in mind that returning workers at low wages and low hours don’t add a lot to consumption vs public benefits they were receiving.

— Dan Alpert (@DanielAlpert) June 5, 2015

Contents

1. Summary of this important report.
2. Where were the jobs?
3. Wages and hours.
4. For More Information.

 

(1)  Summary of this most important economic number

The May employment data was clearly and broadly strong. See the BLS’ Highlights report for the pictures. BLS revised the gains in March and April by +32,000 and estimated that total nonfarm payroll employment rose by 280,000 in May. This compares with an average monthly gain of 207,000 over the past 3 months and 251,000 over the prior 12 months.

Keep a sense of proportion about these numbers. There are 140 million jobs in America, done by 147 million employed workers. The monthly changes are small and so difficult to measure accurately. Watch the patterns instead; ignore those who obsess over the tiny wiggles in May’s numbers. They are mostly statistical noise. For jobs the overall pattern was strong, but not a breakout.

(2)  Where were the jobs?

Growth was in the same sectors as usual. Substantial job gains occurred in professional and business services, leisure and hospitality, and health care. Employment in mining continued to decline.

Thank you ObamaCare. Along with an aging society, this infusion of dollars has boost the heath care sector. The report does not break out hours and wages by industry, unfortunately.

(3)  Wages and hours

For those with jobs, increases in wages and hours worked are the important news. As usual, due to triumphs in corporations’ management systems and anti-union organizing, neither has increased much in the private sector. …

• The average workweek for all all employees was flat at 34.5 hours. The average workweek for production and nonsupervisory employees edged up by 0.1 hour to 33.7 hours (unchanged YoY).
• Average weekly earnings rose 2.0% for production and nonsupervisory employees, slightly over inflation. It must have risen substantially more for managers as it rose by 2.3% for all employees during the past 12 months.

(4)  For More Information

If you liked this post, like us on Facebook and follow us on Twitter. See all posts about economics, monetary policy, and stimulus programs. Of special interest are these about the state of the economy:

1. Dreams of a boom fade & attention turns to secular stagnation.
2. New economic data only deepens the mystery.
3. Updating the recession watch; & what might the government do to fight a slowdown?
4. Economic status report: good news plus chaff from doomsters.
5. Today’s forecast for the US economy & stock market: cooling, perhaps with storms.
6. What does our surprisingly slow economy in Q1 tell us about the future?
7. Update about the economy: slowing, vulnerable, in a strange space.
8. About our slowing GDP: are we near a recession? are the models accurate?
9. A secret of the new business cycle, & why good predictions have become so rare.