Monday, August 19, 2013

Jobs Growing Faster Than Workers (excerpt)

Initial unemployment claims dropped to 320,000 during the week of August 10. That’s the lowest reading since October 2007. When that was reported last Thursday, it contributed to the routs in bond and stock prices that day and on Friday. Is it possible that the claims data are exaggerating the strength of the labor market and the economy given the weakness in other recent indicators?

It’s possible. We know that lots of this year’s job gains have been for part-time workers as employers respond to Obamacare’s disincentives to hire full-time employees. The household employment survey shows that three-quarters of the 980,000 increase in jobs during the first seven months of the year represented part-time jobs. Perhaps employers are converting more of their full-time payroll jobs to part-time ones and hiring more part-timers. At the same time, many employees may be scrambling to find another part-time job to supplement their incomes. Presumably, they are getting counted twice (or more) in the payroll employment survey, thus exaggerating the strength of that survey’s employment gains!

Sure enough, payroll employment rose by 1,347,000 since the start of the year, or 367,000 more than household employment. Those extra jobs are probably all part-time ones and reflect the double counting of workers with more than one part-time job in the payroll survey. In the household survey, a worker with more than one part-time job counts as one worker. To repeat, the payroll survey counts jobs, while the household survey counts workers. So the number of jobs is increasing faster than the number of workers--with the former up 192,400 per month on average from January-July, while the latter is up 140,000 per month on average over the same period.

Today's Morning Briefing: Bonds Agitating Stocks. (1) Staying rational. (2) Neither melt-up nor meltdown for now. (3) Avoiding a melt-up would be good for secular bull story. (4) Has the bull been driven by QE or fundamentals? (5) Back to the old normal for bond yields. (6) From bonds to cash rather than equities. (7) Fed’s new problem is that rising yields are bad for growth. (8) Are jobless claims too good to be true? (9) Surge in part-time jobs exaggerating payroll gains. (10) What will clueless Fed do next? (11) Bullard’s baby steps. (12) Time to sell the bull market’s leaders? (More for subscribers.)

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