Payroll Report: Manufacturing Sheds 24,000 Jobs, Government Adds 24,000, Big Negative Revisions -

Payroll Report: Manufacturing Sheds 24,000 Jobs, Government Adds 24,000, Big Negative Revisions

Sep 06, 2024Jeremy ParkinsonFinance, No picture0

Image Source: PexelsOther than a small 0.1 percent improvement in the unemployment rate, this was a very poor jobs report with private payrolls only +74,000.Data from the BLS, chart by MishJobs vs EmploymentFrom September 2020 through early 2022, nonfarm payroll job gains and full time employment changes tracked together.Starting around March of 2022, a divergence between employment and jobs became very noticeable, and I have been discussing the divergence since then.This month, employment rose by 168,000 vs payrolls up by 142,000. However, full-time employment declined by a whopping 438,000 and manufacturing shed 24,000 jobs!Job Stats vs One Year Ago

Nonfarm Payrolls: +2,568,000

Employment: +142,000

Full Time Employment: -1,021,000

Job Stats vs Two Years Ago

Nonfarm Payrolls: +5,498,000

Employment: +2,676,000

Full Time Employment: +799,000

In the last year, nonfarm payrolls are up by 2.6 million while employment is only up by 142,000 and full-time employment is down by over 1 million.Jobs Overview vs Econoday Consensus

Nonfarm payrolls rose by 142,000 vs the consensus 160,000. But the BLS revised August from 114,000 to 89,000.

Private payroll rose by 74,000 vs the consensus 136,000. And the revision was -23,000.

Manufacturing payrolls declined by 24,000 vs the consensus -2,000.

Job Report Details

Nonfarm Payroll: +142,000 to 158,779,000 – Establishment Survey

Civilian Non-institutional Population: +212,000 to 268,856,000

Civilian Labor Force: +120,000 to 168,549,000 – Household Survey

Participation Rate: +0.0 to 62.7% – Household Survey

Employment: +168,000 to 161,434,000 – Household Survey

Unemployment: -48,000 to 7,115,000- Household Survey

Baseline Unemployment Rate: -0.1 to 4.2% – Household Survey

Not in Labor Force: +91,000 to 100,306 – Household Survey

U-6 unemployment: +0.1 to 7.9% – Household Survey

Nonfarm Payroll Change by SectorGovernment and Health Services are related to the surge of illegal immigrants and the need to address them.Monthly Change in Nonfarm PayrollsMonthly Revisions

The change in total nonfarm payroll employment for June was revised down by 61,000, from +179,000 to +118,000.

The change for July was revised down by 25,000, from +114,000 to +89,000.

With these revisions, employment in June and July combined is 86,000 lower than previously reported.

Nearly every month there are negative revisions. I will report on this separately, in detail.Part-Time Jobs

Involuntary Part-Time Work: +246,000 to 4,830,000

Voluntary Part-Time Work: +246,000 to 22,561,000

Total Full-Time Work: -438,000 to 133,246,000

Total Part-Time Work: +527,000 to 28,256,000

Multiple Job Holders: +65,000 to 8,538,000

The above numbers never total correctly due to the way the BLS makes seasonal adjustments. I list them as reported.It’s important to not that multiple jobs are additive to nonfarm payrolls but not the number of employed.Hours and WagesThis data is frequently revised.

Average weekly hours of all private employees rose 0.1 hour to 34.3 hours.

Average weekly hours of all private service-providing employees was flat at 33.2 hours.

Average weekly hours of manufacturers rose 0.1 hours to 40.0 hours.

An overall decline or rise of a tenth of an hour does not sound line much, but with employment over 160 million, it’s more significant than it appears at first glance.The decline in manufacturing jobs is instructive. Jobs dropped by 24,000 but hours ticked for those still working.Hourly EarningsThis data is also frequently revised. Here are the numbers as reported this month.Average Hourly Earnings of All Nonfarm Workers rose $0.14 to $35.21. A year ago the average wage was $33.91. That’s a gain of 3.8%.Average hourly earnings of Production and Nonsupervisory Workers rose $0.11 to $30.27. A year ago the average wage was $29.09. That’s a gain of 4.1%.Year-over-year wages are keeping up with year-over-year inflation after underperforming for many months. However, year-over-year gains are falling fast.Unemployment RateThe unemployment rate hit a 50-year low in January and April of 2023 at 3.4 percent. It’s now 4.2percent.“The unemployment rate has bottomed this cycle and will generally head higher.”I first made that comment many months ago. If there was any doubt, it’s now erased.Alternative Measures of UnemploymentTable A-15 is where one can find a better approximation of what the unemployment rate really is.

The official unemployment rate is 4.2 percent.

U-6 is much higher at 7.9 percent.

Both numbers would be way higher still, were it not for millions dropping out of the labor force over the past few years.Some of those dropping out of the labor force retired because they wanted to retire. Some dropped out over Covid fears and never returned. Still others took advantage of a strong stock market and retired early.The rest is disability fraud, forced retirement (need for Social Security income), and discouraged workers.Birth Death ModelStarting January 2014, I dropped the Birth/Death Model charts from this report.The birth-death model pertains to the birth and death of corporations not individuals except by implication.For those who follow the numbers, I retain this caution: Do not subtract the reported Birth-Death number from the reported headline number. That approach is statistically invalid.Birth-Death Methodology ExplainedI gave a detailed explanation of the model and why the hype is wrong in my June 8, 2024 post How Much Did the BLS Birth-Death Adjustment Pad the May Jobs Report?I repeat, do not subtract the birth-death number from the headline number. That’s flawed.However, it is now clear that the BLS is too optimistic about the number of jobs they believe are being created by the net creation of new businesses.A Breakdown, by Sector, of the Negative 818,000 BLS Job RevisionsOn August 22, 2024 I gave A Breakdown, by Sector, of the Negative 818,000 BLS Job RevisionsThose negative revisions are a direct result of the BLS Birth-Death model gone haywire.Household Survey vs. Payroll Survey

The payroll survey (sometimes called the establishment survey) is the headline jobs number. It is based on employer reporting.

The household survey is a phone survey conducted by the BLS. It measures employment, unemployment and other factors.

If you work one hour, you are employed. If you don’t have a job and fail to look for one, you are not considered unemployed, rather, you drop out of the labor force.Looking for job openings on Jooble or Monster or in the want ads does not count as “looking for a job”. You need an actual interview or send out a resume.These distortions artificially lower the unemployment rate, artificially boost full-time employment, and artificially increase the payroll jobs report every month.Recent Economic DataSeptember 3: Construction Spending Growth Slows in May, Stops in June, Negative in JulySeptember 5: Small Businesses Reducing Workers for the Last Four MonthsSeptember 5: Fed Beige Book Shows Flat or Declining Economy in 9 of 12 Fed DistrictsI am amused by people who still think the economy is not headed for recession when the data suggests we are in recession already.More By This Author:Spotlight On US Treasuries, Where Are Long-Term Bond Yields Headed?Small Businesses Reducing Workers For The Last Four Months ISM Services Index Up Slightly But Employment Weakens To Nearly Flat