Burgess COMMENTARY

Peter Burgess

Government reports another month of strong job gains—255,000, with unemployment rate still at 4.9%

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The Bureau of Labor Statistics reported Friday that its Current Employment Survey of 146,000 business establishments and government agencies shows the economy created 255,000 new nonfarm payroll jobs in July, far above economists’ expectations. The BLS also revised June’s growth in new jobs from 287,000 to 292,000 and May’s from 11,000 to 24,000. All these are seasonally adjusted numbers.

The strength of the June and July reports could mean the Federal Reserve will impose an interest-rate hike this year, possibly in September. Jeff Cox reported:

'This was another strong report that checked most, if not all of the significant boxes,' said Curt Long, chief economist at the National Association of Federal Credit Unions. 'The labor market should remain strong as long as consumers maintain their robust spending pace.' The total was a combination of 217,000 jobs in the private sector and 38,000 in government. Goldman Sachs economists surveyed in advance had expected the new job creation count to be 190,000.

July marks the 70th consecutive month of overall job growth, and the 76th month of private-sector job growth.

The headline unemployment rate—the one that will be most discussed in the media today, which the bureau labels U3 and calculates from the Current Population Survey of 60,000 households—remained unchanged at 4.9 percent.

The unemployment rate differs by race and sex: Adult men: 4.6 percent; Adult women: 4.3 percent ; Whites: 4.3 percent; Blacks: 8.4 percent; Asians: 3.8 percent; Hispanics: 5.4 percent; American Indians: (not counted monthly); Teenagers: 15.6 percent; (for teenagers of color, the unemployment rate is usually much higher.)

In addition to U3, the bureau also provides other estimates of the job situation. One of these is U6, which gauges both unemployment and underemployment. This category encompasses people with no job, part-time workers who want a full-time job but can't find one, and a portion of the nation’s 'discouraged' workers. In July, U6 rose 0.1 to 9.7 percent.

The civilian workforce in July rose by 407,000 after having risen by 414,000 in June. The employment-population ratio rose fractionally to 59.7 percent, and the labor force participation rate rose to 62.8 percent.

Year over year, wages rose by 2.6 percent.

The BLS includes a 'confidence level' in its estimate of plus or minus 105,000 jobs. This means the 'real' number of new jobs created in July was not 255,000 but ranged between 150,000 jobs and 360,000.

Another calculation the bureau makes is the job situation for Americans aged 25-54. People in this range are the most likely age group to have a job or be looking for one. The employment-population ratio for the 25-54 age group peaked at 81.9 percent in April 2000 and sank to a bottom of 74.8 percent in November 2010. Since then, it has been rising gradually. In July it climbed to 78 percent, the highest level since November 2008.

ADDITIONAL ASPECTS OF THE JULY JOB REPORT:

Hours & Wages

• Average hourly earnings of private-sector production and nonsupervisory employees 7 cents an hour to $21.59 in July.
• Average work week for all employees on non-farm payrolls rose in July to 34.5 hours.
• Average hourly earnings for all employees on private non-farm payrolls rose 8 cents an hour in July to $25.69.
• The manufacturing workweek in July remained unchanged at 40.7 hours.
• The average workweek for production and nonsupervisory employees on private non-farm payrolls in July rose to 33.7 hours.

Job gains and losses in July for selected categories:

Professional services: + 70,000
Temporary help services: + 17,000
Transportation & warehousing: - 11,700
Financial activities: + 18,000
Leisure & hospitality: + 45,000
Information: 0
Education and health services: + 56,000
Health care & social assistance: + 48,800
Retail trade: + 14,700
Construction: 14,000
Manufacturing: + 9,000
Mining and Logging: - 7,000

Here's what the seasonally adjusted job growth numbers have looked like in July for the previous 10 years compared with this July’s gain of 000,000.

July 2006: + 207,000
July 2007: - 33,000
July 2008: - 209,000
July 2009: - 329,000
July 2010: - 70,000
July 2011: + 70,000
July 2012: + 143,000
July 2013: + 140,000
July 2014: + 232,000
July 2015: + 277,000

Average monthly number of new jobs created in:

2014: 251,000
2015: 229,000
2016: 186,000