Here Comes the Latent Demand for Employment: With June’s Data, AJSN Jumps 980,000 to 16.9 Million

This was quite a Bureau of Labor Statistics jobs report this morning.  It wasn’t clearly bad, but in some ways the brakes of ever-better reports slammed on.  

With 213,000 net new nonfarm payroll positions, we exceeded the publicized projections of 180,000 and 200,000.  However, people hoping for a new unemployment-rate low were beyond disappointed, as the marquee seasonally-adjusted figure jumped 0.2% to 4.0% and the unadjusted rate, reflecting more than the considerable usual difference between May and June, soared from 3.6% to 4.2%.  Those officially jobless for 27 weeks or longer went from 1.2 million to 1.5 million, a huge amount for one good-times month, and the two measures best showing how common it is for Americans to be working, the labor force participation rate and the employment-population ratio, split excellent and neutral outcomes, with the former up 0.2% to 62.9% and the latter holding at 60.4%.  Private nonfarm payroll wages disappointed as well, with a below-inflation 5 cent hourly gain to $26.98.

The American Job Shortage Number or AJSN, the metric showing concisely how many more positions could be quickly filled if people consistently knew they were very easy to get, gained almost one million – a great deal, even with employment regularly dropping from the first month to the second – as follows:

Compared with May, essentially the entire difference came from official joblessness’s rise from 5.76 million.  The second largest contributor was from those wanting work but not looking for it for 12 months or longer, which added 188,000 to the AJSN, and nothing else was significant.  Part of these gains in latent demand were offset by another large drop in those claiming no interest in jobs, down 1.3 million, and those temporarily unavailable, which fell 259,000.  The share of the AJSN from unemployment sharply reversed its recent course, from 32.5% in May to 36.2% here.

It is clear to see much of what happened.  The deservedly well-publicized improvement in available work drew in people in categories some might think reflected permanent disinclinations, mostly those saying they did not want a job at all, which has now fallen 2.3 million since April.  That is why so much of American employment demand is latent – when people hold out hope, their interest picks up, and they move to categories with higher likelihoods of working.  That is also one reason why our prosperity is more tenuous than it looks, and why we cannot ignore these almost 17 million.  If we have a recession, which with the trade war now underway has become more likely, the count of those claiming they will not work will go way over 90 million, but their inherent awareness will not vanish.  In the meantime, while it may not be repeated next month, the turtle, thinking of those 213,000 net new positions and labor-force participation increase, did take a rather modest forward step.