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  • Writer's pictureNick Andriacchi

Job market, wages, and inflation are as hot as the summer heat

Updated: Aug 25, 2021

July 2012 Employment Report - Key Points:


Over 900,000 jobs added in June. A record 10.1 million jobs are available, which is hire than the previous month's total available jobs. This tells me that there are not enough people in the workforce to satisfy the growing demand for labor.


So, given the data are enhanced UI benefits that were extended earlier this year really needed?


According to the BLS (June 2021) of the top 10 states with the lowest unemployment rates, 8 ended enhanced unemployment benefits early. Of the top 10 states with the highest unemployment rates, none of those ended enhanced benefits early.

  • Continued unemployment claims in states that ended benefits by June 19 declined 12% since late May, significantly more than the mere 4% decline in states keeping the program through September, according to a Morgan Stanley report.


  • While wages were 4% year-over-year, inflation came in at 5.4%. I think this has more to do with supply chain and lack of productivity and less to do with rising wages.


  • In July, 13.2 percent of employed persons teleworked because of the coronavirus pandemic, down from 14.4 percent in the prior month. These data refer to employed persons who teleworked or worked at home for pay at some point in the last 4 weeks specifically because of the pandemic.




Analysis of the July Employment Report

“The data for recent months suggest that the rising demand for labor associated with the recovery from the pandemic may have put upward pressure on wages,” the BLS said in the report, though it cautioned that the Covid impact is still skewing data and wage gains are uneven across industries.


· Temporary help added 9,700 jobs in July. This gain was less than previous months but keeps the winning streak alive.

· A more encompassing measure of unemployment (U6) that includes discouraged workers and those holding part-time jobs for economic reasons dropped to 9.2% from 9.8% in June.

· Previous months revisions were up. The change in total nonfarm payroll employment for May was revised up by 31,000, from +583,000 to +614,000, and the change for June was revised up by 88,000, from +850,000 to +938,000. With these revisions, employment in May and June combined is 119,000 higher than previously reported. (Monthly revisions result from additional reports received from businesses and government agencies since the last published estimates and from the recalculation of seasonal factors.)

· Prime age labor force participation rate (ages 25-54) was up a healthy .1% this month at 81.8%. While the number has improved, it is still down by 1.1% since February 2020, the last month before the pandemic started.

· The overall labor force participation was little changed at 61.7%. This is 1.8% below last February (2020) level.

· In July, average hourly earnings for all employees on private nonfarm payrolls increased by 11 cents to $30.54, following increases in the prior 3 months. Average hourly earnings for private-sector production and nonsupervisory employees also rose by 11 cents in July to $25.83.

Average hourly earnings also increased more than expected, rising 0.4% for the month and are up 4% from the same period a year ago, at a time when concerns are increasing about persistent inflationary pressures.

· The average workweek for all employees on private nonfarm payrolls unchanged at 34.8 hours in June. In manufacturing, the average workweek was up 0.2 hour to 40.5 hours, and overtime was unchanged 3.2 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls remained the same at 34.1 hours.

· APD reported that 330,000 jobs were created in July


JOLTS Report August 9, 2021

Job Openings

· On the last business day of June, there were 10.1 million open jobs – another record.

· The job openings rate rose to 6.5 percent. Job openings increased in several industries, with the largest increases in professional and business services, which includes temporary help (+227,000); retail trade (+133,000); and accommodation and food services (+121,000).

· Job openings increased in other services (+109,000), state and local government education (+46,000), and educational services (+35,000). The number of job openings decreased in arts, entertainment, and recreation (-80,000); state and local government, excluding education (-56,000); and federal government (-17,000). The number of job openings was little changed in all four regions.

Hires

· In June, the number and rate of hires increased to 6.7 million (+697,000) and 4.6 percent, respectively. Hires increased in retail trade (+291,000); state and local government education (+94,000); and durable goods manufacturing (+36,000).

Separations

· Total separations include quits, layoffs and discharges, and other separations. Quits are generally voluntary separations initiated by the employee. Therefore, the quits rate can serve as a measure of workers’ willingness or ability to leave jobs. Layoffs and discharges are involuntary separations initiated by the employer. Other separations includes separations due to retirement, death, disability, and transfers to other locations of the same firm.

· In June, the number of total separations edged up to 5.6 million (+254,000). The rate was little changed at 3.8 percent. The total separations level increased in professional and business services (+124,000); durable goods manufacturing (+48,000); and state and local government, excluding education (+30,000). Total separations decreased in state and local government education (-43,000).

· In June, the quits level and rate increased to 3.9 million (+239,000) and 2.7 percent, respectively. Quits increased in professional and business services (+72,000); durable goods manufacturing (+47,000); and state and local government, excluding education (+33,000). Quits decreased in state and local government education (-26,000).

Net Change in Employment

· Over the 12 months ending in June, hires totaled 72.1 million and separations totaled 65.2 million, yielding a net employment gain of 6.9 million. These totals include workers who may have been hired and separated more than once during the year

Source: ADP, BLS, Wall Street Journal

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