Friday, December 7, 2018

Neutral Jobs Data? No, November’s Was Good – The AJSN, Now Down 200,000 to Latent Demand of 15.5 Million, Shows Why

My first thought as I went through this morning’s Bureau of Labor Statistics Employment Situation Summary was that November was a flatline month.  Nonfarm payroll employment gained 155,000, over the level needed to absorb our population gain but not much.  The break-evens included seasonally adjusted unemployment (3.7%), unadjusted unemployment (3.5%), the labor force participation rate (62.9%), and the employment-population ratio (60.6%), arguably the four most important jobs figures the BLS publishes.  Average hourly nonfarm payroll wages didn’t do anything either, gaining 5 cents per hour, or just about the inflation rate, to $27.35.  The two other major data points were mixed, with the count of people working part-time for economic reasons, or holding on to short-hours positions while thus far unsuccessfully seeking full-time ones, up 200,000 to 4.8 million, and the number officially jobless for 27 weeks or longer off 100,000 to 1.3 million. 

Given all that, especially with the last two statistics not an input to it, I expected the American Job Shortage Number or AJSN, which shows latent demand for American work, to have stayed virtually the same.  However, it lost 200,000, improving as follows:

Half of the drop was from lower official unemployment.  The other half came from one of the numbers of marginal labor-force attachment above.  The count of people saying they wanted to work but had not looked for it during the previous year fell 136,000 from October, which meant their group’s latent demand fell about 109,000.  The other smaller factors almost held, with a 45,000 rise in those temporarily in school or training and a 120,000 gain in “other” offset by 53,000 fewer calling themselves discouraged. 

The AJSN’s year-over-year comparison was also strong.  In November 2017, there were 636,000 more unemployed and almost 1.5 million more counted as non-civilian (in the armed forces), institutionalized, and unaccounted for (off the grid), with changes in the other components small and mixed, resulting in a 660,000 drop.  

You may read from other sources that this jobs report was disappointing.  I don’t see that.  More new positions than our rising population needs, even if they were below some estimates, is, as we will find out with the next recession, nothing to take for granted.  The smaller categories above are straightening themselves out, with people settling into a robust employment market but with more realistic views of whether it could help them personally.  Otherwise, we broke even.  As to why November wasn’t better, the answer may be that we are simply running out of room.  We can always use many more jobs, but barring something on the scale of a national infrastructure project, there is no reason for us to get them.  Given that, this is hardly a shabby place to hang out.  And yes, while it was small, the turtle did indeed take another step forward.

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