Payrolls Still Slowing Into A Third Year

Today’s bland payroll report did little to suggest much of anything. All the various details were left pretty much where they were last month, and all the prior trends still standing. The headline Establishment Survey figure of 235k managed to bring the 6-month average up to 194k, almost exactly where it was in December but quite a bit less than November. In other words, despite what is mainly written as continued “strength” is still pointing down in all the key places.

Employment is usually a lagging indication, coincident at best, so continued weakness isn’t necessarily surprising given that we have no idea how much of a delay there might or will be to the economy’s relative improvement (stopped slowing). But the bottom of the 2015-16 “rising dollar” economy, or near-recession, was just about a year ago. That should have been enough time for labor conditions to at least hint at a small pickup.

Whether we examine full-time employment or the labor force, there is no acceleration; in that Household Survey segment, for example, the gain in the estimated number of employees reporting working full-time is still slowing and to a truly significant degree. The average monthly gain was about 350k to start 2015, but now just over two years later full-time employment is averaging just 129k.

Apart from the statistical variability with regard to the labor force, including both the late 2015 surge I have little doubt was due to renewed work requirements for food stamp benefits, as well as the population discontinuity sprung on the data last month, labor force growth really hasn’t changed all that much. Given how depressed it has been since the Great “Recession”, it really shouldn’t be this way.

A good part of the reason the labor market has been so overstated in the narrative (in the statistics is another matter) is that the figures are almost never given context. The headline number is the headline number even though statistically speaking it is the most suspect. Even the six-month average gain fails to properly illustrate the overall weakness in labor beyond just the deceleration of the past few years. In other words, we have to keep in mind from what point that deceleration has occurred.