Independent Strategy

Tags: Employment

We’ve seen a further deceleration in the pace of employment growth, the September non-farm payrolls report showing just 194k jobs were created in the month, down from an upwardly revised 366k in August and well below the consensus guess of 500k.  Despite the glut of job openings there was a further decline in the participation rate too, down 0.1% pts to 61.6%, which is unchanged from a year ago.  That contributed to another steep fall in the unemployment rate, U3 down to 4.8% from 5.2% and U6 to 8.5% from 8.8%.

Labour market growth slowed a little more than expected in August, amid some disruption to the services recovery from the Delta strain.  But there were still +235k jobs added (mkt +750k) and we saw upward revisions to prior months, so the net impact was still positive, leading to a further decline in the unemployment rate to 5.2% from 5.4% and the U6 rate dropped down to 8.8% from 9.2%.  The participation unchanged at 61.7%.  Govt payrolls shrank a little after recent strong gains (-8k) but manufacturing continued to grow (+37k).  Weekly hours were 34.7 from a downward pay revised 34.7, which by itself remains elevated from its pre-pandemic range.

Another month of strong payroll gain, the headline number showing a net gain of 943k jobs (mkt 870k) while revisions also shifted upward (a net 146k added for the past three months).  703k of the July gain came from private payrolls (mkt 700k).  Manufacturing added 27k jobs and government 240k, accounting for all of the surprise.  Labour participation edged up to 61.7% which left the unemployment rate at 5.7% (down from 5.9% but above the 5.4% median guess).  Prime age participation (25-54) saw a further surge, for both male and female workers.  This is a positive trend and reinforces our lack of concern for labour scarcity.  It’s important to contrast this with the post-GFC period where prime participation continued to fall after the initial crisis.

Strong payroll gains with some additional impetus from upward revisions.  Overall the economy added 850k jobs in June (mkt 700k) up from 583k in May (revised from 559k), of which 662k came from private payrolls (mkt 600k).  Manufacturing added 28k jobs and government 188k.  Labour participation unchanged at 61.6% and the unemployment rate actually ticked up to 5.9%, as job gains were netted off with an increase in the labour force.  Note prime age participation (25-54) increased for both male and female workers.  This is positive and should dampen worries about labour scarcity.

US

POST » 4th June, 2021 » US May Non-Farm Payrolls

While the US added 559k jobs in May according to the non-farm payrolls report, this marked another downside surprise for the series where the median estimate was up at 650k.  There was a modest upward revision to the April numbers (278k vs. 266k initially reported) but that doesn’t move the needle.  Private payrolls growth came in at 492k while manufacturing payrolls added 23k job and government 67k.  The unemployment rate dropped to 5.8% from 6.1% but this was aided by a decline in participation (61.6% from 61.7%).

The headline non-farm payrolls jobs figure surprised on the downside in April, with 266k jobs created versus the median forecast of 978k.  And the March figure was also revised downward by 146k.  Obviously, it was private payrolls that disappointed (+218k vs. 893k survey) while manufacturing jobs contracted slightly (-18k).  Government couldn’t make up for that but did offer a +48k contribution.  The unemployment rate actually ticked back to 6.1%, a result of the 0.2% pt improvement in participation and the work week ticked up again.

February Non-farm payrolls recorded a 379k gain, comfortably exceeding the +182k median forecast.  This leaves the 3m average at +80k.  Private sector payrolls were significantly better than the headline print at +465k, manufacturing added +21k jobs while government dropped -86k.  The surprise might have been even higher were it not for the weather events in Texas, which was behind the 939k people not at work due to the weather (Feb average is 385k).  The unemployment rate ticked down to 6.2% and participation was unchanged at 61.4% despite this.  The workweek did drop though, to 34.6, although this is from a rather elevated 34.9.

US

POST » 8th January, 2021 » US December Non-Farm Payrolls

December Non-farm payrolls recorded a -140k drop, quite a bit below the markets +71k guess.  This takes the 3m average down to +283k.  Private sector payrolls were a little better than the headline print at -95k, helped by manufacturing which added +38k jobs while the decline in government moderated to -45k.  That was still the fourth consecutive decline but is largely census related.  Despite the headline miss revisions were very positive, +91k in November alone

US

POST » 4th December, 2020 » US November Payrolls Report

November Non-farm payrolls number came in at +245k (mkt +469k), bringing the 3m average down to +5227k.  Private sector payrolls were a little better again at +344k but there is a sequential slowdown happening there too.  Manufacturing payrolls grew by 27k while we saw another month of government job losses, -99k, the third consecutive drop.  Revisions overall were down a bit, Oct NFP revised down to 610k vs. the 638k initially reported.

US

POST » 2nd October, 2020 » US September Payrolls

September non-farm payrolls number came in under expectations at +661k (mkt +850k).  But the private payrolls number bettered at +877k vs. 850k mkt, while manufacturing payrolls also beat (+66k vs. +35k est) with a loss of 216k on the government side explaining the headline miss.  There was a sizable upward revision to the jobs gained in August too.

US

POST » 30th September, 2020 » US September ADP

ADP reporting a further strong month of job gains (or jobs recovery) with the749k increase and net 53k upward revision to August quite a bit ahead of expectations, although consensus estimates should be taken with more of a pinch of salt than usual given the variables in play.  It was mid-sized firms that drove the increase, alongside small businesses.  There was actually a deceleration in job creation at larger firms, although they still added workers.

The disruption from the Coronavirus continues to impact the data with the employment numbers for May showing a significant deviation from expectations and the near 2mn loss reported in the May ADP report.  Indeed, based on the preliminary numbers the economy added 2.51mn jobs over the month, which compares to the 20.69mn jobs lost in April.  Methodological problems are again in evidence ...

US

POST » 3rd April, 2020 » US March Non-Farm Payrolls

Bleak payrolls report.  While the median survey was always going to be a short in the dark, the -701k decline in jobs was significantly more troubling than the mkts -100k guess.  That’s the worst number since March 2009, a period of losses that saw five consecutive payrolls figures below the -700k mark starting from November 2008.  Looking at the past fortnights jobless claims figures the April number and revisions to this release will paint an even bleaker picture of the labour market.  In the household survey nearly 2.987mn jobs were recorded lost.

ADP reported fewer than expected job losses for March, with a modest -24k drop (mkt -150k), which compares to the 3.3mn jump in initial jobless claims last week.  Partly this is due to the survey dates (it tallies responses up to the 12th of the month).  So we will see catch up next month.  Prior month was revised down to 179k from 183k.

The rapid and devastating effect of Covid-19 on the labour market is unprecedented based on this week’s jobless claims.  Initial claims in week ending came in at 3,283k which looks like a data error rather than an actual real data point.  But real it is, and further increases look likely in the coming weeks as the economic stop continues to push people out of employment.

Tracking the strong ADP release on Wednesday, the January non-farm payrolls report also comfortably beat expectations.  Weather has helped a bit last couple of months, with seasonal disruptions lower than normal, but that doesn’t detract from the underlying strength of the labour market.

Another positive surprise on the wages front with a strong pick up in the headline data. The rebound in weekly wage growth was partly due to a more favourable hours worked comparison though.  Hourly wage growth has been steadier.  Alongside steady inflation means real income growth has improved, continuing the recovery we’ve seen in recent months.

A positive surprise, particularly after the weak ADP number on Wednesday, with non-farm payrolls +224k in June, although there were mild downward revisions for the previous two months (-11k).

Modest improvement in the UK wages story.  But it still appears that nominal gains are topping out with data flattered by the number of hours worked (at 32.2 vs. 31.8 in the same period a year ago).  The stabilisation in nominal growth rates is not necessarily bad news for consumption given that inflation also looks to be moderating again, certainly at the headline level.

Tags

ADP (7) Agriculturals (1) Asia crisis (1) Asset Allocation (1) Australia (2) Autos (1) Bank of Japan (1) Big Data (1) BoJ (1) Bonds (6) Brazil (1) Brexit (5) Canada (1) Capital Goods (2) Central Bank (8) Challenger (1) China (20) Claims (1) Climate change (2) Commodities (1) Copper (1) Coronavirus (4) Corporate Bonds (1) Corporate Debt (2) Covid (2) Covid-19 (47) CPI (8) Credit (44) Current Account (1) Debt (2) Debt Crisis (4) Democracy (4) Demographics (9) Deposits (1) Disruptive Technologies (4) Durable Goods (1) Earnings (1) ECB (10) Elections (2) Emerging Markets (4) Employment (19) Equities (1) Euro (3) Eurogroup (1) Europe (2) Eurozone (19) Exports (2) Factory Orders (6) Federal Reserve (8) Fixed Income (2) France (1) FX (2) GDP (12) Germany (15) Globalisation (8) Global Pandemic (3) Gold (2) Google Mobility (43) HICP (1) Hong Kong (1) Housing (5) IFO (3) Income (1) India (1) Industrial Production (9) Inflation (24) Interest Rates (11) Internet (1) Investment (5) IP (9) Iran (4) Ireland (1) ISM (2) Italy (6) Japan (5) Jobless Claims (1) Korea (3) Labour Market (11) Liquidity (8) Manufacturing (3) Monetary Policy (19) Money (4) Money Market (1) Money Supply (18) Myanmar (1) New Monetarism (6) New Zealand (1) Oil (6) Online (1) Payrolls (20) PCE (2) PMI (1) PMIs (1) Politics (10) Populism (6) Portugal (1) PPI (4) Production (1) Productivity (2) Profits (1) QE (5) Quantum economics (4) Real Estate (1) Redline Money (15) Reserves (3) Retail Sales (11) Russia (2) Services (3) Services PMI (1) Sovereign Bonds (3) Sovereign Debt (4) Spain (4) Sterling (1) Sweden (2) Technials (1) Technicals (105) TICS (1) Total Social Financing (12) Trade (10) TSF (4) Turkey (1) UK (18) Ukraine (1) Unemployment (18) US (35) USD (9) Vietnam (1) Wages (18)

In the Media