By Thomas Cooley and Peter Rupert
The BLS establishment survey showed an increase of 1.371M workers and 1.027M in the private sector for the month of August. The bulk of the gain was in service producing jobs, up 984,000, with retail employment the largest gainer in that category.
Average weekly hours increased slightly, from 34.5 to 34.6. Average hourly earnings rose 11 cents to $29.47.
From the household survey (seasonally adjusted) there was an increase in the labor force and an increase in the labor force participation rate from 61.4 to 61.7. The employment to population ratio increased from 55.1 to 56.5. The number of unemployed persons fell by 2.788M. Thus, the unemployment rate fell from 10.2% to 8.4%. However, there are roughly 13.5M persons unemployed and only 5.9M vacancies, so it will likely take a while before the labor market is back to something like “normal” whatever that may be.
Initial and Continued Claims
The BLS seasonal adjustment methodology for initial claims and continued claims (insured unemployment) has been altered to reflect the widening gap between the adjusted and unadjusted data. The switch from multiplicative to additive factors will bring the seasonally adjusted data more in line with the not seasonally adjusted data. This issue was pointed out in this blog a couple of months ago, maybe they listened to us! The stark comparison can be seen in the latest large drop in the seasonally adjusted data reflecting the new factors. However the unadjusted claims were slightly higher than the previous week.
Overall, the labor market continues to mend. However, the mending is certainly not even across income and sector types. The lower earning employees were those hardest hit and are those that will likely take the longest to recover.
The Shape of the Recovery
While everyone would love to see a v-shaped recovery, the continued growth in employment from its trough is not a harbinger of one. Unemployment is still only a shade above where it bottomed in the great recession. And the mismatch between vacancies and unemployed workers is larger than it was during that recovery. This recovery will most likely be sluggish and a lot depends on how fast people get back to work. However, many of the jobs are gone forever and the speed of the recovery will depend on how fast the labor gets reallocated.