June Employment: Some Improvements, But Per the AJSN We’re Now 17.5 Million Jobs Short

I didn’t know what to expect from this morning’s Bureau of Labor Statistics employment data.  The publicized forecasts, which have been getting less and less accurate, called for 178,000 net new nonfarm payroll positions, which is good, but there were disturbing trends popping up last month.  June, though, was better than anyone seemed to expect on the most important fronts. 

Those new positions came in at 222,000, about 90,000 more than our growing population, now over 326 million, can absorb.  The employment-population ratio and the labor force participation rate, the best indicators of how common it is for Americans to actually be working, each recovered half of their 0.2% May drops, and are now at 60.1% and 62.8% respectively.  The count of long-term jobless, those out for 27 weeks or longer, held steady at 1.7 million. 

The other numbers, however, were worse.  The adjusted unemployment rate was up 0.1% to 4.4%, and the unadjusted one rose a mainly but not completely seasonal 0.4% to 4.5%.  Those working part-time for economic reasons, or holding on to less than full-time opportunities while looking thus far unsuccessfully for those, grew 100,000 to 5.3 million.  Average private nonfarm payroll wages were again up only 3 cents per hour and less than inflation to reach $26.25.  Latent demand for work also increased more than seasonally – the American Job Shortage Number, or AJSN, which shows how many more positions could be filled if all knew that getting one was easy and routine, rose over 700,000 to reach almost 17.5 million, as follows:

Since the AJSN is not seasonally adjusted, its increase, given that many more people are working in a typical May than such a June, is not as significant as it seems.  However, while the AJSN is now 665,000 lower than a year before, it had dropped 845,000 between the two most recent Mays.  Its improvement since June 2016 is almost exactly explained by the 900,000 drop in official unemployment, when partially offset by the 700,000 more American-citizen expatriates.  In this past year, the number of those claiming no interest in working has gone up over 700,000, and a surprising 954,000 more are in the armed services, in institutions, or off the grid, but the latent employment demand gain they represent was offset by reductions in several smaller categories made up of people more likely to work.

Overall, how good a month was it?  Despite the preponderance of worsening metrics, we are happy with this morning’s findings.  The 222,000 net new jobs is probably the most important figure, and the participation and employment ratios reversed what could have been a disturbing trend.  In the short-term, we don’t know where American employment is going, but the turtle, as has often been his wont these past few years, took a modest step forward.