by Calculated Risk on 7/07/2017 01:01:00 PM

Here is another update of tracking employment during Presidential terms.  We frequently use Presidential terms as time markers - we could use Speaker of the House, or any other marker.

NOTE: Several readers have asked if I could add a lag to these graphs (obviously a new President has zero impact on employment for the month they are elected). But that would open a debate on the proper length of the lag, so I'll just stick to the beginning of each term.

Important: There are many differences between these periods. Overall employment was smaller in the '80s, however the participation rate was increasing in the '80s (younger population and women joining the labor force), and the participation rate is generally declining now.  But these graphs give an overview of employment changes.

The first graph shows the change in private sector payroll jobs from when each president took office until the end of their term(s). Presidents Carter and George H.W. Bush only served one term.

Mr. G.W. Bush (red) took office following the bursting of the stock market bubble, and left during the bursting of the housing bubble. Mr. Obama (blue) took office during the financial crisis and great recession. There was also a significant recession in the early '80s right after Mr. Reagan (yellow) took office.

There was a recession towards the end of President G.H.W. Bush (purple) term, and Mr Clinton (light blue) served for eight years without a recession.

Click on graph for larger image.

The first graph is for private employment only.

Mr. Trump is in Orange (just five months).

The employment recovery during Mr. G.W. Bush's (red) first term was sluggish, and private employment was down 811,000 jobs at the end of his first term.   At the end of Mr. Bush's second term, private employment was collapsing, and there were net 396,000 private sector jobs lost during Mr. Bush's two terms. 

Private sector employment increased slightly under President G.H.W. Bush (purple), with 1,510,000 private sector jobs added.

Private sector employment increased by 20,966,000 under President Clinton (light blue), by 14,717,000 under President Reagan (yellow), and 9,041,000 under President Carter (dashed green).

There were only 1,937,000 more private sector jobs at the end of Mr. Obama's first term.  At the end of his second term, there were 11,756,000 more private sector jobs than when Mr. Obama initially took office.

During the first five months of Mr. Trump's term, the economy has added 821,000 private sector jobs.

 A big difference between the presidencies has been public sector employment.  Note the bumps in public sector employment due to the decennial Census in 1980, 1990, 2000, and 2010. 

The public sector grew during Mr. Carter's term (up 1,304,000), during Mr. Reagan's terms (up 1,414,000), during Mr. G.H.W. Bush's term (up 1,127,000), during Mr. Clinton's terms (up 1,934,000), and during Mr. G.W. Bush's terms (up 1,744,000 jobs).

However the public sector declined significantly while Mr. Obama was in office (down 268,000 jobs).

During the first five months of Mr. Trump's term, the economy has gained 42,000 public sector jobs.

The third graph shows the progress towards the Trump goal of adding 10 million jobs over the next 4 years.

After five months of Mr. Trump's presidency, the economy has added 863,000 jobs, about 180,000 behind the projection.

by Calculated Risk on 7/07/2017 10:00:00 AM

The headline jobs number was above expectations, and there were combined upward revisions to the previous two months.  And the unemployment increased slightly.  

Earlier: June Employment Report: 222,000 Jobs, 4.4% Unemployment Rate

In June, the year-over-year change was 2.24 million jobs. This is decent year-over-year job growth.

Note that June has been the strongest month for job growth over the three previous years, followed by July and November.  This is the 4th consecutive solid job gain in June:  304 thousand in June 2014, 206 in June 2015, 297 thousand in June 2016, and now 222 thousand in June 2017. 

Average Hourly Earnings

Click on graph for larger image.

This graph is based on “Average Hourly Earnings” from the Current Employment Statistics (CES) (aka "Establishment") monthly employment report. Note: There are also two quarterly sources for earnings data: 1) “Hourly Compensation,” from the BLS’s Productivity and Costs; and 2) the Employment Cost Index which includes wage/salary and benefit compensation.

The graph shows the nominal year-over-year change in "Average Hourly Earnings" for all private employees.  Nominal wage growth was at 2.5% YoY in June.

Wage growth has generally been trending up.

Employment-Population Ratio, 25 to 54 years old

Since the overall participation rate has declined recently due to cyclical (recession) and demographic (aging population, younger people staying in school) reasons, here is the employment-population ratio for the key working age group: 25 to 54 years old.

In the earlier period the participation rate for this group was trending up as women joined the labor force. Since the early '90s, the participation rate moved more sideways, with a downward drift starting around '00 - and with ups and downs related to the business cycle.

The 25 to 54 participation rate was unchanged in June at 81.7%, and the 25 to 54 employment population ratio increase to 78.5%.

The participation rate has been trending down for this group since the late '90s, however, with more younger workers (and fewer older workers), the participation rate might move up some more.

Part Time for Economic Reasons

From the BLS report:

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers), at 5.3 million, changed little in June. These individuals, who would have preferred full-time employment, were working part time because their hours had been cut back or because they were unable to find a full-time job.

The number of persons working part time for economic reasons increased in June. The number working part time for economic reasons suggests a little slack still in the labor market.

These workers are included in the alternate measure of labor underutilization (U-6) that increased to 8.6% in June.

Unemployed over 26 Weeks

This graph shows the number of workers unemployed for 27 weeks or more.

According to the BLS, there are 1.66 million workers who have been unemployed for more than 26 weeks and still want a job. This was essentially unchanged from May.

This is generally trending down, but still a little elevated.

Although U-6, the number of persons employed part time for economic reasons, and the number of long term unemployed are still a little elevated, it appears the economy is nearing full employment.

Overall this was a solid report.

by Calculated Risk on 7/07/2017 08:41:00 AM

From the BLS:

Total nonfarm payroll employment increased by 222,000 in June, and the unemployment rate was little changed at 4.4 percent, the U.S. Bureau of Labor Statistics reported today. Employment increased in health care, social assistance, financial activities, and mining.
...
The change in total nonfarm payroll employment for April was revised up from +174,000 to +207,000, and the change for May was revised up from +138,000 to +152,000. With these revisions, employment gains in April and May combined were 47,000 more than previously reported.
...
In June, average hourly earnings for all employees on private nonfarm payrolls rose by 4 cents to $26.25. Over the year, average hourly earnings have risen by 63 cents, or 2.5 percent.
emphasis added

Click on graph for larger image.

The first graph shows the monthly change in payroll jobs, ex-Census (meaning the impact of the decennial Census temporary hires and layoffs is removed - mostly in 2010 - to show the underlying payroll changes).

Total payrolls increased by 222 thousand in June (private payrolls increased 187 thousand).

Payrolls for April and May were revised up by a combined 47 thousand.

This graph shows the year-over-year change in total non-farm employment since 1968.

In June the year-over-year change was 2.24 million jobs.  This is a decent year-over-year gain.


The third graph shows the employment population ratio and the participation rate.

The Labor Force Participation Rate increased in June to 62.8%. This is the percentage of the working age population in the labor force.   A large portion of the recent decline in the participation rate is due to demographics.

The Employment-Population ratio increased to 60.1% (black line).

I'll post the 25 to 54 age group employment-population ratio graph later.

The fourth graph shows the unemployment rate.

The unemployment rate increased in June to 4.4%. 

This was above expectations of 170,000 jobs, and the previous two months were revised up.  A solid report.

I'll have much more later ...

by Calculated Risk on 7/06/2017 08:01:00 PM

Earlier:

My June Employment Preview

and Goldman: June Employment Preview

Friday:
• At 8:30 AM ET, Employment Report for June. The consensus is for an increase of 170,000 non-farm payroll jobs added in June, up from the 138,000 non-farm payroll jobs added in May. The consensus is for the unemployment rate to be unchanged at 4.3%.

by Calculated Risk on 7/06/2017 04:51:00 PM

A few excerpts from a note by Goldman Sachs economist Spencer Hill:

We estimate nonfarm payrolls increased by 180k in June, roughly in line with consensus of +177k ... Our forecast reflects mixed labor market fundamentals in the month – including solid employment surveys but weaker jobless claims – as well as a positive impact from youth summer hiring ...

We estimate the unemployment rate remained stable at 4.3%, though we view the risks as skewed towards rounding up to 4.4% ... Finally, we expect average hourly earnings to increase 0.3% month over month, reflecting somewhat favorable calendar effects, and 2.6% year-over-year.

CR Note: My employment preview is here.

by Calculated Risk on 7/06/2017 01:45:00 PM

On Friday at 8:30 AM ET, the BLS will release the employment report for June. The consensus, according to Bloomberg, is for an increase of 170,000 non-farm payroll jobs in June (with a range of estimates between 140,000 to 200,000), and for the unemployment rate to be unchanged at 4.3%.

The BLS reported 138,000 jobs added in May.

Here is a summary of recent data:

• The ADP employment report showed an increase of 158,000 private sector payroll jobs in June. This was below expectations of 178,000 private sector payroll jobs added. The ADP report hasn't been very useful in predicting the BLS report for any one month, but in general, this suggests employment growth below expectations.

• The ISM manufacturing employment index increased in June to 57.2%. A historical correlation between the ISM manufacturing employment index and the BLS employment report for manufacturing, suggests that private sector BLS manufacturing payroll increased about 20,000 in June. The ADP report indicated 6,000 manufacturing jobs added in June.

The ISM non-manufacturing employment index decreased in June to 55.8%. A historical correlation between the ISM non-manufacturing employment index and the BLS employment report for non-manufacturing, suggests that private sector BLS non-manufacturing payroll jobs increased about 230,000 in June.

Combined, the ISM indexes suggests employment gains of about 250,000.  This suggests employment growth above expectations.

• Initial weekly unemployment claims averaged 243,000 in June, up from 238,000 in May. For the BLS reference week (includes the 12th of the month), initial claims were at 242,000, up from 233,000 during the reference week in May.

The increase during the reference week suggests slightly more layoffs during the reference week in June than in May. This suggests a somewhat weaker employment report in June than in May.

• The final May University of Michigan consumer sentiment index decreased to 95.1 from the May reading of 97.1. Sentiment is frequently coincident with changes in the labor market, but there are other factors too like gasoline prices and politics.

• Conclusion: None of the indicators alone is very good at predicting the initial BLS employment report.  The ADP report and weekly unemployment claims suggest below consensus job growth in June, although the ISM reports suggest stronger job growth.

by Calculated Risk on 7/06/2017 11:59:00 AM

This is a key distressed market to follow since Las Vegas saw the largest price decline, following the housing bubble, of any of the Case-Shiller composite 20 cities.

The Greater Las Vegas Association of Realtors reported Southern Nevada home prices and sales keep climbing amid tight supply, GLVAR Housing Statistics for June 2017

The Greater Las Vegas Association of REALTORS® (GLVAR) reported today that local home prices and sales continued to climb as homes continue to sell faster amid a very tight housing supply.
...
By the end of June, GLVAR reported 5,174 single-family homes listed for sale without any sort of offer. While up 4.1 percent from May, that’s down 27.1 percent from one year ago. For condos and townhomes, the 639 properties listed without offers in June were up 1.4 percent from May, but still represented a 51.9 percent drop from one year ago.

Meanwhile, local home sales continue to increase. The total number of existing local homes, condos and townhomes sold in June was 4,368, up from 3,957 in June 2016. Compared to one year ago, sales were up 10.3 percent for homes and up 10.6 percent for condos and townhomes.

According to GLVAR, total sales so far in 2017 continue to outpace 2016, when 41,720 total properties were sold in Southern Nevada. That was more than the 38,577 properties sold during 2015. It was also more total sales than in 2014, but fewer than each year from 2009 through 2013.
...
For several years, GLVAR has been reporting fewer distressed sales and more traditional home sales, where lenders are not controlling the transaction. That trend continued in June, when 3.4 percent of all local sales were short sales – which occur when lenders allow borrowers to sell a home for less than what they owe on the mortgage. That compares to 4.4 percent of all sales in June 2016. Another 2.9 percent of all June sales were bank-owned, down from 5.9 percent one year ago.
emphasis added

1) Overall sales were up 10% year-over-year.

2) Active inventory (single-family and condos) is down sharply from a year ago (A very sharp decline in condo inventory).

3) Fewer distressed sales.

by Calculated Risk on 7/06/2017 10:07:00 AM

The June ISM Non-manufacturing index was at 57.4%, up from 56.9% in May. The employment index decreased in June to 55.8%, from 57.8%. Note: Above 50 indicates expansion, below 50 contraction.

From the Institute for Supply Management: June 2017 Non-Manufacturing ISM Report On Business®

Economic activity in the non-manufacturing sector grew in June for the 90th consecutive month, say the nation's purchasing and supply executives in the latest Non-Manufacturing ISM® Report On Business®.

The report was issued today by Anthony Nieves, CPSM, C.P.M., A.P.P., CFPM, Chair of the Institute for Supply Management® (ISM®) Non-Manufacturing Business Survey Committee: "The NMI® registered 57.4 percent, which is 0.5 percentage point higher than the May reading of 56.9 percent. This represents continued growth in the non-manufacturing sector at a slightly faster rate. The Non-Manufacturing Business Activity Index increased to 60.8 percent, 0.1 percentage point higher than the May reading of 60.7 percent, reflecting growth for the 95th consecutive month, at a slightly faster rate in June. The New Orders Index registered 60.5 percent, 2.8 percentage points higher than the reading of 57.7 percent in May. The Employment Index decreased 2 percentage points in June to 55.8 percent from the May reading of 57.8 percent. The Prices Index increased 2.9 percentage points from the May reading of 49.2 percent to 52.1 percent, indicating prices increased in June after decreasing in May. According to the NMI®, 16 non-manufacturing industries reported growth. The non-manufacturing sector continued to reflect strength for the month of June. The majority of respondents’ comments are positive about business conditions and the overall economy."
emphasis added

Click on graph for larger image.

This graph shows the ISM non-manufacturing index (started in January 2008) and the ISM non-manufacturing employment diffusion index.

This suggests slightly faster expansion in June than in May.

by Calculated Risk on 7/06/2017 08:47:00 AM

From the Department of Commerce reported:

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that the goods and services deficit was $46.5 billion in May, down $1.1 billion from $47.6 billion in April, revised. May exports were $192.0 billion, $0.9 billion more than April exports. May imports were $238.5 billion, $0.2 billion less than April imports.

Click on graph for larger image.

Imports decreased and exports increased in May.

Exports are 16% above the pre-recession peak and up 5% compared to May 2016; imports are 3% above the pre-recession peak, and up 7% compared to May 2016.

In general, trade has been picking up.

The second graph shows the U.S. trade deficit, with and without petroleum.

The blue line is the total deficit, and the black line is the petroleum deficit, and the red line is the trade deficit ex-petroleum products.

Oil imports averaged $45.03 in May, down from $45.40 in April, and up from $34.19 in May 2016.  The petroleum deficit had been declining for years - and is the major reason the overall deficit has mostly moved sideways since early 2012. 

The trade deficit with China increased to $31.6 billion in May, from $29.0 billion in May 2016.

by Calculated Risk on 7/06/2017 08:33:00 AM

The DOL reported:

In the week ending July 1, the advance figure for seasonally adjusted initial claims was 248,000, an increase of 4,000 from the previous week's unrevised level of 244,000. The 4-week moving average was 243,000, an increase of 750 from the previous week's unrevised average of 242,250.
emphasis added

The previous week was unrevised.

The following graph shows the 4-week moving average of weekly claims since 1971.

Click on graph for larger image.


The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims increased to 243,000.

This was higher than the consensus forecast.

The low level of claims suggests relatively few layoffs.