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Employment: Further Rebound in Jobs, Still Down 12.9 Million

August 7, 2020

Bottom Line: Job gains were slightly better than expected in July as the economy added 1.76 million new jobs, continuing a three-month rebound from the shocking losses of over 20 million jobs in April as shutdowns for the novel coronavirus took hold. Leisure and hospitality jobs as well as retail trade and health care service jobs have dominated the volatility and rebounded further in July. But public education jobs also led the gains in July as schools in many parts of the country reopened. The household survey used to calculate the unemployment showed gains nearly as strong as the establishment survey (used to tally payrolls, pushing the unemployment rate down to 10.2% from 11.1% as labor force participation slipped slightly. Average hourly earnings rebounded, a good sign that many of the jobs created were slightly higher-paying jobs. Remember that earnings rose sharply in April when jobs were lost as most of the losses were in lower-paying jobs and then earnings fell as those employees were re-hired in May and June. Overall, this report showed the labor market rebound continued in July, albeit at a slower pace of gains than in May and June. Jobs gained in the rebound are still a fraction of those lost in April with payrolls lower by nearly 12.9 million since February.

Payroll Employment rose by 1,763k in July, compared with market expectations for an increase of 1480k. The prior 2 months were revised, lower in June by 9k, and higher in May by 26k.

Government jobs ROSE by 301k. Consequently, private sector jobs ROSE by 1462k. Private education jobs rose by 24k. State and Local education jobs rose by 245k.

Overall employment is now -7.5% BELOW its year-ago level, Over the past 12 months, 11,371k jobs have been created.

In July, the job gains were in :

  • Trade, Transportation & Utilities (+33k with 258k of those in Retail Trade),
  • Professional & Business Services (+170k with the addition of 143.7k in Temp Help Services),
  • Leisure & Hospitality (+592k),
  • Government (+301k),
  • Education & Health Services (+191k),
  • Other Services (+149k),
  • Manufacturing (+26k), and
  • Financial Activities (+21k).
Jobs were shed in Information (-15k).

The Unemployment Rate FELL by 0.9 percentage points in July to 10.2%, compared with market expectations for a small decline to 10.6%.

Household employment rose by 1350k while the labor force declined by 62k, resulting in a decrease in the number of unemployed of 1412k.

The Labor Force Participation Rate FELL by 0.1 percentage points to 61.4%.

The Employment-Population Ratio ROSE by 0.5 percentage points to 55.1%.

The number of people Working Part-Time for Economic Reasons FELL by 579k to 8,382k. while Long-Term Unemployment ROSE by 110k to 1,501k (accounting for 9.2% of the unemployed), and the Mean Duration of Unemployment ROSE by 2.2 weeks to 17.9 weeks.

There are now 16.3 million people officially unemployed. In addition, there are another 7,732k people who say they want a job but are not currently looking for one. Finally, another 8,382k people are working part-time because of slack economic conditions.

The Index of Aggregate Hours ROSE by 1.0%, combining the solid gain in private payroll employment and the shorter workweek.

Hourly Earnings ROSE by 0.2% in July, above market expectations of -0.5%. Hourly earnings are now 4.8% ABOVE their year ago level.

Weekly Earnings FELL by 0.1%, the result of the change in hourly earnings and a shorter workweek. Weekly earnings are now 5.4% ABOVE their year ago level.

The Average Workweek FELL by 0.1 to 34.5 hours, ABOVE the market consensus at 34.4 hours.

Article by Contingent Macro Advisors