Total nonfarm payroll employment rose by 163,000 in July, and the unemployment rate was essentially unchanged at 8.3 percent, the U.S. Bureau of Labor Statistics reported today. Employment rose in professional and business services, food services and drinking places, and manufacturing.
Weekly hours did not move; hourly wages were up two cents. There is a problem however — the diffusion index across all private employers was down four tenths to 56.4. So how did we get an increase? Manufacturing — surprisingly enough — had its diffusion index spike higher by 3 full points.
Let’s look at the household survey, because as I noted last month the establishment survey was markedly weak compared to the household, and the establishment survey is full of games (otherwise known as the “birth-death model” among other schemes.)
And in the household survey I do not like what I see.
The total number of people of working-age went from 243.155 (million) to 243.354, or 199,000 more working-age people. However,the number of employed people dropped from 143.202 (million) to 143.126, or an actual drop of 76,000 jobs.
Worse, the number of people not in the labor force increased from 86.770 million to 86.828, or an increase of 58,000 — people who simply gave up.
Here’s the chartwork:
Note that the “big chart” shows the monthly decline in the household survey. While annualized remains positive, the rate-of-change has gone negative. Worse, it appars that we’re putting in “lower highs” in the monthly numbers, which isn’t good at all. This bears watching…
Not-in-labor force is coming up again…
That little “hook” is a decrease in the actual number of employed people. That is not supposed to happen, as the population increases — therefore, there should be a nice upward trend. While one month does not a trend make, this is a break that you would be wise not to ignore.
No help here; right on schedule the employment rate is turning back down, just as it has the last few years. This is arguably the most-important number in the series from a standpoint of government sustainability, since only employed people pay taxes. As such the employment rate is directly related to the size of government that is sustainable on a long-run basis.
This chart, which is simply the annualized change of employed persons adjusted to remove population changes, shows what’s been happening since 2000. Call this the “trade policy stupidity indicator” if you’d like, because that is pretty much what it is.
Bluntly, the hollowing out of the American labor force, and thus the American consumer’s ability to continue to both fund government and consume goods and services, continues its decline. At no point since December of 2006 have we seen a positive figure on that chart, and even then, during the height of the fraudulent housing bubble boom peaking in 2005-2006, net actual gains were small.
To address our government and private-sector economic malaise over the intermediate and longer term the government policies that made profitable locust-like offshoring, all of which devolve into initiation of force against the people in those lands, must be reversed.