US Employment Indicators

In yesterday’s Morning Briefing, I showed that there was some very good news in the latest employment report that had been widely reported as being full of nothing but bad news. Nevertheless, there was more bad news about the employment situation, which was reported yesterday right after we sent our Morning Briefing. May’s JOLTS report showed that the latest hirings and separations data yielded an employment gain of only 12,000 in May. That’s much weaker than the weak 77,000 payroll gain reported in the more widely followed Employment Situation released at the beginning of every month by the Bureau of Labor Statistics. Over the past 12 months through May, payrolls are up 1.78 million according to the former and 1.80 million according to the latter survey.

Also disappointing yesterday was June’s NFIB survey of small business owners. The NFIB reported: “The percent of owners reporting hard to fill job openings lost 5 points, falling to 15 percent of all owners.…Seasonally adjusted, the net percent of owners planning to create new jobs fell 3 points to 3 percent, an unfortunate reversal of three months of improved readings. This is definitely not typical of an expansion.”

Yet, I remain impressed by the strength of wages and salaries during June. The actual data will be released on July 31 in the Personal Income report. However, the preliminary estimate is based on data already released in June’s Employment Situation report. Total aggregate hours worked rose 0.4% m/m during June to 3.8 billion hours, the most since November 2008. Average hourly earnings rose 0.3% m/m. If we multiply the two of these variables together, the resulting Earned Income Proxy rose 0.6% in June to a new record high. The proxy is highly correlated with aggregate wages and salaries in private industry. It suggests that retail sales and personal consumption expenditures might have been surprisingly strong in June. We will soon find out.

Today’s Morning Briefing: Golden State. (1) From Gold Rush to Chapter 9. (2) Another Bill of Rights. (3) From fracking boom to the minimum wage. (4) The Muddling Model vs. the Meltdown Model. (5) The right way vs. the wrong way. (6) ECRI doubling down on imminent recession. (7) Waiting for the FSMI to turn up. (8) More bad news from the labor market. (9) So why is the Earned Income Proxy so strong? (More for subscribers.)