850K was the headline NFP number today. Just a reminder that, while a surprise on the upside (150K over Bloomberg consensus of just yesterday), employment is still down 4.4% relative to NBER peak.
Figure 1: Nonfarm payroll employment from June release (dark blue), Bloomberg consensus as of 7/1 for June nonfarm payroll employment (light blue +), industrial production (red), personal income excluding transfers in Ch.2012$ (green), manufacturing and trade sales in Ch.2012$ (black), consumption in Ch.2012$ (light blue), and monthly GDP in Ch.2012$ (pink), all log normalized to 2020M02=0. Source: BLS, Federal Reserve, BEA, via FRED, IHS Markit (nee Macroeconomic Advisers) (7/1/2021 release), NBER, and author’s calculations.
CEA discusses how to interpret these highly volatile employment numbers in such turbulent times, in a blog post from a few days ago.
What is true is that the bifurcated nature of the labor market recovery is diminishing, albeit slowly.
Figure 2: Employment in manufacturing (blue), and in accommodation and food services (brown), both in thousands, s.a. Source: BLS.
Jason Furman and Wilson Powell discuss the messages from the employment situation from the release.
Nice details from Jason Furman and Wilson Powell including the fact that the employment to population ratio stayed at 58.0% but did they note the fact that the household survey measure fell by 18 thousand?
pgl: Household survey is so high volatility/subject to revision, Furman usually gives it a *very* low weight even in normal times.
I agree but remember the Lawrence Kudlow rule during Bush43’s first term. The most reliable measure between the two was the one that gave him the highest increase for that particular month!
@ Menzie
You know me relatively well by now yes?? (as well as you can know someone online). You can guess my question before I ask it. If the Payroll survey is much better than the Household survey then why……..
I suspect your answer would be related to something to do with “noise”??
Moses Herzog: See https://econbrowser.com/archives/2020/01/is-employment-growth-a-lot-lower-than-we-think particularly link to Furman, https://www.milkenreview.org/articles/extracting-the-signal-from-the-noise-7-tips-for-interpreting-macroeconomic-data but establishment can’t tell us about demographics of employed, unemployed, how many people are unemployed.
Appreciate it.
There’s also quite a discrepancy between the household survey numbers and the establishment numbers. Of course, they measure two different things; the household survey measures people with a job while the establishment survey measures the number of jobs. We could be seeing something where a lot of people work multiple part-time jobs, so counted once in the survey and multiple times in the establishment number.
Your explanation of the difference does not exactly exhaust the possibilities. Remember these are both surveys.
The fast-food employment-population ratio (16-19), while not great, is now above the high for the prior expansion. They may not be multiple job holders, but many in low-wage jobs are. Empop among prime age workers and the above-54 crowd, not nearly as good. This is not direct evidence f your point, but I think it is suggestive.
https://cepr.net/jobs-2021-07/
July 2, 2021
Economy Adds 850,000 Jobs in June; Unemployment Edges Up to 5.9 Percent
By DEAN BAKER
Black teen unemployment falls to another record low, falling to 9.3 percent.
The June employment report showed very strong employment growth in the establishment survey, while the household survey showed little improvement from May. The 850,000 gain was the largest since an increase of 1,583,000 last August. By contrast, the household survey showed no change in the employment-to-population ratio or labor force participation rate. The unemployment rate edged up slightly, as employment in the household survey slipped by 18,000.
It is not unusual to see sharp monthly divergences between the two surveys. Over a longer period, they tend to show a similar picture of the labor market, but the household survey can have erratic movements that don’t seem to correspond to anything in the economy. For example, in October 2017, the household survey showed a drop in employment of 633,000, and then in August 2018 it showed a decline of 619,000. In both periods the economy was growing at a healthy pace and there was no evidence of weakness in other economic data. These drops were preceded and/or followed by months with large gains.
Establishment Job Gains Driven by Growth in Hard Hit Sectors
The biggest job gains were in state and local education (229,700), restaurants (194,300), and hotels (75,100). The gains in state and local education indicates schools returning to in-class teaching, although employment is still down by 583,000 from the pre-pandemic level. The arts and entertainment category also showed a large gain of 73,600, as many venues that had been closed due to the pandemic were able to reopen in June.
The retail sector added 67,100 jobs as large gains in general merchandise stores and clothing stores more than offset losses in food stores. Manufacturing added 15,000 jobs, but is still down by 481,000 from the pre-pandemic levels. Growth in the sector was slowed by a loss of 12,300 jobs in the auto industry, the result of continuing shortages. Construction jobs fell by 7,000, the third consecutive decline. This likely also reflects shortages of materials.
Airlines added 7,800 jobs, leaving employment 83,400 (16.1 percent) below the pre-pandemic level. The motion picture industry continues to be the hardest hit. While it added back 5,400 jobs in June, it is still down 149,400 jobs (33.8 percent) from the pre-pandemic level. Nursing homes lost another 3,600 jobs in June, continuing a pattern of job loss since the pandemic hit. Employment in nursing care facilities is now down 210,500 (13.3 percent) from February, 2020. This may reflect a drop in the number of residents due to the pandemic.
Wage Growth at the Bottom Remains Strong
The average hourly wage from production and nonsupervisory workers continued to rise rapidly, increasing at a 5.9 percent annual rate comparing the last three months (April, May, June) with prior three months (Jan, Feb, Mar), and 3.7 percent year-over-year. The lowest paying sectors had even more rapid increases, with wages in the retail sector rising at an 11.7 percent annual rate over the last three months, but just 2.5 percent year-over-year. For restaurants the annual rate is 25.1 percent, and 11.2 percent year-over-year. These sharp wage gains at the bottom are impressive, but not likely to be inflationary since they account for a relatively small share of the total wage bill. The average hourly wage overall is up 3.6 percent from its year-ago level….
https://fred.stlouisfed.org/graph/?g=rbas
January 4, 2018
Average Hourly Earnings of All Private Workers, 2017-2021
(Percent change)
https://fred.stlouisfed.org/graph/?g=EvBg
January 4, 2018
Average Hourly Earnings of All Employees in Manufacturing, 2017-2021
(Percent change)
https://fred.stlouisfed.org/graph/?g=EvBd
January 4, 2018
Average Hourly Earnings of All Employees in Construction, 2017-2021
(Percent change)
https://fred.stlouisfed.org/graph/?g=EvBb
January 4, 2018
Average Hourly Earnings of All Employees in Transportation and Warehousing, 2017-2021
(Percent change)
Dean notes our host’s reply to my question and so much more useful details.
“The lowest paying sectors had even more rapid increases, with wages in the retail sector rising at an 11.7 percent annual rate over the last three months, but just 2.5 percent year-over-year. For restaurants the annual rate is 25.1 percent, and 11.2 percent year-over-year. These sharp wage gains at the bottom are impressive, but not likely to be inflationary since they account for a relatively small share of the total wage bill. The average hourly wage overall is up 3.6 percent from its year-ago level”
The wage increases in the restaurant and retail sector will be seen as good news by progressives but I bet Princeton Steve is going to be all upset that he has to pay a wee bit meal for dining out. Awww! OK – let him eat bagels!
I’d link the NYT story but you will get the paywall a lot there. I normally only pick up Tuesday’s hardcopy NYT but been picking up more lately because the trump CFO gunk. But anyway, Yahoo doesn’t have the paywall BS and this is a comparable story:
https://www.yahoo.com/now/russia-launches-booster-shots-amid-115851529.html
To me nothing says the situation is getting serious more that Putin finally giving in and saying vaccines are important. But notice he qualifies that the foreign vaccines are “bad” of course. It’s hard to imagine the Russian situation getting as bad as India or Brazil, still I mean this story is like 2 days old, and I’m getting the idea if they don’t do some shutdowns this could get bad. Of course people’s lives and health is crucial, but I can’t help it, my mind nearly immediately drifts to the economic consequences. If Russia is a net exporter of oil, then this really doesn’t hurt oil demand much I am assuming?? They say only about 15% of Russians are vaccinated. So two questions. Is there any way this doesn’t start causing the deaths of large numbers of Russians?? (diligent mask usage??) and If any country takes travelers arriving from Russia how are they not being incredibly negligent??
I was reading that the American government is airlifting 2.5 million doses of Moderna vaccine going to Pakistan. And this might offend people, but I thought “Why the hell would we send one of the best vaccines over to Pakistan??” They aren’t a true ally and they hid BIn Laden in a kind of “open secret” in the area. Then the news article mentioned Pakistan’s nearness to India and I was like “Oh”. Still seems like there would be some better choices, why not directly to India. But it’s hard to figure out I guess when the India government is so inept. But then Pakistan’s government isn’t exactly the archetype of government efficiency. Would be interesting to be a fly in the room when these decisions are made. I have this feeling it would probably just make me more angry or dumbfounded by these vaccine distribution decisions.
“It’s hard to imagine the Russian situation getting as bad as India or Brazil”
The situation is already almost as bad as in Brasil. The official number of deaths only explans less than 30% of the excess mortality. A more realistic number is around 400 000 -450 000 deaths due to the corona virus in Russia.
The past Russian propaganda, i.e. Russia has defeated the virus and the Russian vaccisnes are wold beating, is acording to Russian colleagues self defeating: Almost nobody wears masks and follows distance rules, add a strong anti vaccination movement and it is no surprise that many factories are shut down due to high covid levels.
It is obvious that with only 40000 ICU beds most severe cases do not get a treatment and Russia is despite high death toll still far away from herd immunity.
Will be interesting to watch how the EU handels tourism from Russia…
@ Ulenspiegel
Yeah, this is interesting, your comment inspired me to dig a little more. Like, at one time “The Moscow Times” used to be one of the more respected papers over there. But I don’t know if that has been interfered with and obstructed in a similar fashion to how Beijing has now ruined the “South China Morning Post” which used to be the best paper in southeast Asia. Anyways, this seems to verify your thoughts pretty closely:
https://www.themoscowtimes.com/2021/06/04/russias-pandemic-excess-deaths-climb-to-475k-a74120 <—notice this is a month old
https://www.themoscowtimes.com/2021/07/03/coronavirus-in-russia-the-latest-news-july-2-a69117
I pray that I’m not misquoting here, but I think Professor Chinn has indicated this source “Our World in Data” is at least semi-dependable:
https://ourworldindata.org/coronavirus/country/russia
I’ve found seemingly every data point under the sun, except the one I want, excess deaths for Russia, preferably over time in graph form or possibly an average annual number compared with this year—or maybe just months since the Delta has been a relatively short time frame. This per capita kind of deal between nations is about the best I can find. America looks super horrible in the graphic compared to other nations, but I guess we can rationalize the excuse that we are better at gathering data and information collection for the statistics.
https://ourworldindata.org/explorers/coronavirus-data-explorer?tab=map&zoomToSelection=true&time=latest&pickerSort=desc&pickerMetric=total_cases&hideControls=true&Metric=Confirmed+deaths&Interval=Cumulative&Relative+to+Population=true&Align+outbreaks=false&country=~RUS
“I’ve found seemingly every data point under the sun, except the one I want, excess deaths for Russia”
That is not by chance. :-)))
Last year it was a scientist in Moscow who dig out excess mortality data for Moscow and compared them with official corona fatalities. He concluded that only 30% of the excess deaths were explained with the official corona detahs that in sprin/summer when flu coul have excluded as cause.
However, the issue got traction: Here some data from German university groups (German) published by the Bundeszentral für politische Bildung) the Geran governmental organ which delivers data used in high school education und poltical education of interested citizens. 🙂
https://www.bpb.de/internationales/europa/russland/analysen/330811/uebersterblichkeit-27-03-2021
@ Ulenspiegel
Appreciate the informational thoughts and the link very much. Will have me a look-over here.
I just barely started reading this site with Google translate and enjoying this treasure trove. I am going to save it to my bookmarks, and If I can figure out how to get it to easily translate over to English I’m going to put it in my RSS reader. Going to revisit this candy store for sure. I really appreciate it Ulenspiegel. If you know of other German websites similar to this please don’t hesitate to pass them along.
Thanks again from Uncle Moses.
At least I got my wife, Marina, back from Moscow safe and sound. The situation there is indeed very bad, and the anti-vaxx movement very strong.
@ Barkley Rosser
Putin wouldn’t even admit which vaccine he had taken for months, then finally claimed it was the Russian made vaccine We don’t know which vaccine Putin took. any more than we “know” that the orange abomination ever took “HCQ”. We have no real evidence from orange fatty’s doctor he EVER took HCQ. We know donald trump likes to make a public exhibition of everything, so why not take the “HCQ” in a public setting?? Because donald trump NEVER took “HCQ”. How to we know Putin didn’t have access to Moderna?? We don’t. It’s an extremely good bet that if Putin wanted Moderna he could get access to it in a “stealth” way. Putin is intelligent, which vaccine would an intelligent person with access to everything take?? Either way, when Putin continually speaks passively on TV about the vaccine and how it’s “not compulsory” at the same time he and the KGB are forcing certain state employees to take the vaccine it presents a very confusing situation in a country already used to medical conspiracies (real or not).
https://www.amazon.com/Stalins-Last-Crime-Against-1948-1953/dp/0060933100/ref=pd_lpo_14_img_0/143-1860725-3631210?_encoding=UTF8&pd_rd_i=0060933100&pd_rd_r=69aa9a70-91ac-4d75-b814-db72cf296025&pd_rd_w=OTDXX&pd_rd_wg=FlAac&pf_rd_p=3b5203d9-bdd0-47f6-97e5-387010fc3251&pf_rd_r=D3VZJY9CBM2CJGZF910Q&psc=1&refRID=D3VZJY9CBM2CJGZF910Q
Putin has also never appeared in public in a mask, which even Tramp did a few times. He has recently changed his tune to be pushing people to get vaccinated, but clearly has no credibility on this given his own behavior. BTW, apparently he almost never appears in public at all anymore.