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Trend Macrolytics, LLC
Donald Luskin, Chief Investment Officer
Thomas Demas, Managing Director
Michael Warren, Energy Strategist
Data Insights: Jobs Friday, April 7, 2017
Today's jobs data: what you need to know
Non-farm payrolls Change Mar: +98 Revision Feb: -16 Revision Jan: -22
Private payrolls Change Mar: +89 Revision Feb: -6 Revision Jan: -17
Employment Change Mar: +472
Unemployment Change Mar: -326
Long -term unemployment Change Mar: -123
Civilian labor force Change Mar: +145
Unemployment rate Mar: 4.50% Change Mar: -0.21%
Underemployment rate Mar: 8.9% Change Mar: -0.3%
Participation rate Mar: 63.0% Change Mar: unch
UE adjusted for participation Mar: 8.8% Change Mar: -0.20%
Average weeks unemployed Mar: 25.3 Change Mar: +0.2
% longterm unemployed Mar: 23.3% Change Mar: -0.5%
Aggregate hours worked index Mar: 106.4 Change Mar: +0.1% Revision Feb: -0
Average hourly earnings Mar: +0.2% Change Mar: -0.1% Revision Feb: +0.1%
Aggregate weekly earnings Mar: 132.9 Change Mar: +0.2% Revision Feb: -0.3
Monthly job-finding probability Mar: 35.3% Change Mar: +0.3%
Monthly separation probability Mar: 1.9% Change Mar: -0.1%
% involuntary part-time Mar: 3.6% Change Mar: -0.1%
"Household" vs "Payroll" jobs Change Mar: +438
More than all entrants employed4.72 million below trend
Source: Bureau of Labor Statistics, TrendMacro calculations
For more information contact us: Donald Luskin: 312 273 6766 [email protected] Thomas Demas: 704 552 3625 [email protected]
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Today's payroll data: what you need to know -- where did the jobs come from? Sequential month change, thousands SA ---- Net job losses Biggest change per detail module: best worst
Durable goods +11
Nondurable goods unch
Temp services +25
Other +43
Education -4
Motor vehicles +3
Other +8
Health care +20
Retail -30
Transportation +0
Utilities -1
Service-providing +61
Other +1
Federal -1
Local +9 Financial +9
Government +9
Pro/Business +68
Edu/Health +16
Leisure/Hospitality +1
Information -12State +1
Manufacturing +11
Mining/logging +15
Construction +1
Private +66
Non-farm +60
Wholesale -0
Goods-producing +26
Where is the pay coming from? Vertical: Hourly wages vs average Horizontal: Payrolls change this month Circle size: Share of all employment
Energy/Mining
Construction
Manufacturing
Wholesale
Retail
Transportation
UtilitiesInformation
FinancialPro Services
Education/Health
Leisure
Other
-60%
-40%
-20%
+20%
+40%
+60%
-40 -20 0 +20 +40 +60 +80
Source: BLS, TrendMacro calculations
Job growth associated with higher-wage sectors this month.
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The payroll cycle in the Not So Great Expansion following the Great Recession Growth MOM from July — 09-10 — 10-11 — 11-12 — 12-13 — 13-14 — 14-15 — 2015-16 2016-17
-0.35%
-0.25%
-0.15%
-0.05%
+0.05%
+0.15%
+0.25%
+0.35%
+0.45%
Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
Source: BLS Current Population Survey, TrendMacro calculations
The ultimate jobless recovery is becoming jobful Unemployment: thousands Short-term = <27 weeks Long-term = >27 weeks
Income inflation adjusted to today's USD
Short-term unemployed
Long-term unemployed
Labor force drop-outs
Total unemployed
Total unemployed + dropouts
Median real household income
$48,000
$50,000
$52,000
$54,000
$56,000
$58,000
$60,000
$62,000
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Source: BLS Current Population Survey, TrendMacro calculations
4
— Unemployment rate normalized for participation rate December 2007 — Participation rate — Headline unemployment rate Recession
4%
5%
6%
7%
8%
9%
10%
11%
12%
62.0%
62.5%
63.0%
63.5%
64.0%
64.5%
65.0%
65.5%
66.0%
66.5%
Dec 07 Dec 08 Dec 09 Dec 10 Dec 11 Dec 12 Dec 13 Dec 14 Dec 15 Dec 16
Source: BLS Current Population Survey, TrendMacro calculations
Winner and losers in the Not So Great Expansion following the Great Recession Change in total payrolls from prior business cycle peak, millions
Management, professional
Services
Sales and office
Production, farming-7
-5
-3
-1
+1
+3
+5
+7
+9
Dec 2007 Dec 2008 Dec 2009 Dec 2010 Dec 2011 Dec 2012 Dec 2013 Dec 2014 Dec 2015 Dec 2016
Source: BLS, NBER, TrendMacro calculations
5
Monthly job-finding probability (the outflow rate from unemployment) Chance of an unemployed person becoming employed in one month (per Shimer 2005) Recession
15%
25%
35%
45%
55%
65%
48 51 54 57 60 63 66 69 72 75 78 81 84 87 90 93 96 99 02 05 08 11 14 17
15%
20%
25%
30%
35%
40%
45%
07 08 09 10 11 12 13 14 15 16 17
Source: BLS Current Population Survey, TrendMacro calculations
Monthly job-separation probability (the inflow rate to unemployment) Chance of an employed person becoming unemployed in one month (per Shimer 2005) Recession
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%
5.5%
48 51 54 57 60 63 66 69 72 75 78 81 84 87 90 93 96 99 02 05 08 11 14 17
1.6%
1.8%
2.0%
2.2%
2.4%
2.6%
2.8%
07 08 09 10 11 12 13 14 15 16 17
Source: BLS Current Population Survey, TrendMacro calculations
6
The Beveridge Curve Cycle relationship between unemployment and job openings
— Expansion — Recession Polynomial trend (order 2), plus monthly plots for 09-current expansion • Latest
2%
3%
4%
5%
6%
7%
8%
9%
10%
11%
1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% 5.5%
Un
em
plo
yme
nt
rate
Vacancy rate
08-09 rec
53-54 rec
57-58 rec
60-61 rec
90-91 rec
73-75 rec
80 rec
81-82 rec
01 rec 70 rec
09-current exp
01-07 exp
61-69 exp
54-57 exp
70-73 exp
82-90 exp
75-80 exp
80-81 exp
58-60 exp
91-01 exp
+4%
+5%
+6%
+7%
+8%
+9%
+10%
+1.5% +2.5% +3.5% +4.5% +5.5%
08-09 recAvg exp
Avg rec
09-current exp
Source: BLS Current Population Survey & JOLTS. Pre-2000:Conference Board normalized per Valletta (2005),
TrendMacro calculations
7
Involuntary part-time workers as percentage of the employed labor force Persons available for full-time work Recession
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%
5.5%
6.0%
6.5%
7.0%
48 51 54 57 60 63 66 69 72 75 78 81 84 87 90 93 96 99 02 05 08 11 14 17
2%
3%
4%
5%
6%
7%
07 08 09 10 11 12 13 14 15 16 17
Source: BLS Current Population Survey, TrendMacro calculations
Aggregate weekly private hours-worked index Recession
40
50
60
70
80
90
100
110
48 50 52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16
90
95
100
105
98 01 04 07 10 13 16
Source: BLS Productivity and Costs (quarterly) and Current Employment Stats (recent monthly), TrendMacro calcs
8
Difference in employment change: "household" minus "payroll" surveys Recession
-1500
-1000
-500
0
+500
+1000
+1500
94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17
Small company bias
Big company bias
Source: BLS Current Population Survey and Current Employment Statistics, TrendMacro calculations
Civilian labor force versus 20-year trend, millions Recession
50
70
90
110
130
150
48 50 52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16
152
154
156
158
160
162
07 08 09 10 11 12 13 14 15 16 17
Source: BLS Current Population Survey, TrendMacro calculations
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