Jack Dunn - Reclaiming Common Sense

August 2017 better than August 2015 or August 2016

This months Jobs Report does not reflect the impact on jobs in Texas and Louisiana as a result of Hurricane Harvey. The data collected for this report was collected on August 12th, two weeks before Harvey made landfall. That said, we will not see the impact on the jobs and unemployment levels for at least once to two more months.

The monthly employment situation report can be analyzed from a number of different ways. There are two data sets that are used to create the report. The Current Population Survey (CPS) data measures the number of part-time (PT) jobs, Full-time (FT) jobs, the number of unemployed U3) workers, and an estimate of the workforce population. The Current Employment Statistics (CES) data measures the number of workers. The data that is recorded is the non-seasonally adjusted (NSA) data. The data that is reported is the seasonally adjusted (SA) data. The seasonal factors used to convert the NSA data to the SA data changes between data sets, categories (FT, PT, U3,) month, season, and year.

This column produces many articles in preparation for the jobs report. The "August Employment Report Forecast" article projected the possible changes in both the CPS data and the CES data. Another piece of data that often receives attention is the multiple job worker data. The article "Potential Surge in People Working Two PT Jobs" examined recent trends in the number of people working two jobs, especially two part-time jobs. The multiple job worker data matters because some people who are working two jobs instead of one full-time job. Some people are not working because others are working two jobs. The unemployment data is being kept low by those who are working on part-time job instead of collecting unemployment. Unemployment levels are also low because when workers lose one of their multiple jobs they are still employed. Normally if people lose a part-time job, even if it is their only job, do not receive unemployment benefits. If a person who is working a full-time job and a part-time job and they lose their full-time job they are still employed.  So what happened this month?

August 2017 grew faster than August 2015 and August 2016.  The growth this month was anemic. We grew at 0.04%. Part of the slow growth was due to the situation where we saw the July NSA CES jobs revised higher by 30,000 workers. Officially we add 165,000 SA CES private sector workers. We could have seen 195,000 new workers reported. Zero growth was a possibility.

The Seasonal Factors used to convert the data were the highest ever used for the month of August. If we would have used the seasonal factor from August 2015 then the SA CES would have been reported at 152,000 workers. The 2016 values would have generated a SA CES of 159,000. This was a better August than the past two years.

Better First Seven Month in Office than his predecessors. If you look at just the NSA CES private sector worker data then you will see than President Trump has added more private sector workers than Presidents Clinton, Reagan, George W. Bush, or Obama. Presidents Reagan, Bush, and Obama had inherited recessions. Remember that each President has February as their first official jobs report. Some Presidents do not want to accept responsibility for the first year of their Presidencies.

The Private Sector is Growing Faster this August than Last Month or Last August.  Last month the NSA CES was growing at 1.85%. This month we are growing at 1.88%. There was some concern last year, addressed in this column, that we could have been heading into a jobs recession. We are growing at roughly the same rate we were growing during August of 2011 while we were emerging from an actual recession. Will this growth continue, in light of Harvey? We may see new hires to fix what is broken. We may see more retail sales to replace what was destroyed.

The Quirks of the Data Sets Meant We Lost Jobs and Added Workers. The CPS data set shows that we lost both NSA FT jobs and NSA PT jobs. This happened during August of 2007, 2008, and 2009. We have had other Augusts with net job losses during 2003, 2004, 2005, and basically ever August other than August 2011. This is normal as people are heading back to school.

We Also Reported a Loss of Seasonally Adjusted Jobs - Again, this is normal. The "Jobs Streak" data that President Obama was touting was the SA CES worker data. If he was touting the private sector jobs data then his streak would not have "existed." It is important to keep track of the seasonally adjusted job number because the seasonally adjusted participation number is based on the SA jobs and the SA unemployment data.

The Unemployment Level was recorded as a drop and reported as an increase. The drop in the real unemployment level was anticipated because the number of continuing claims fell from mid-July to Mid-August. Will we see a spike in unemployment claims next month? It depends if those people in Texas were working multiple jobs, part-time jobs, or full-time benefited jobs.

Even with the Unemployment Rate below 5% we are not at Full-employment. The participation rate had been sliding since the beginning of 2010. The good news here is that the August participation rate is higher this year than it was during August of 2016, which was higher than it was during August of 2015. Participants are those who are unemployed, those who are working full-time jobs, and those working part-time jobs. We had rough 160,000,000 participants this month. We could have had 160 million full-time workers, 160 million part-time workers or 160 million unemployed worker and we would have had the same participation rate. The problem is that while we have seen improvement in the participation rate, we are nowhere near where we were during August of 2007 or August of 2008. We have a lower unemployment rate than August 2007 and a lower Participation Rate. Lower unemployment rate good. Lower participation rate bad.

The good news is that we have the most August full-time workers, non-seasonally adjusted, ever, or seasonally adjusted, ever. We have 127.3 million NSA FT jobs and 125.7 million SA FT jobs.  We have fewer part-time jobs than we have had during August 2012, August 2013, or August 2014. We are up from August 2015 and August 2016. This was a good report. It was not as good as expected, in part due to upward revisions to the prior data. Part of the growth issue is that August growth has been slowing for decades. Future articles will address the changes in jobs for men and women, by sector, and by age group.

It's the economy.