Friday's Jobs Report

by Dollars and Sense

Well, the August jobs report came in, and while not a complete disaster, revealed that job losses are not declining any faster (as July's did). Meanwhile, the unemploment rate, which had shown a small reversal in July, jolted vigorously back in the wrong direction (to 9.7% from 9.4%). 15 million Americans are now out of work. And the percentage of Americans working continues to plunge precipitously (this chart--thanks to Calculated Risk--is really a shocker: it shows that the drop is the biggest and fastest during a recession since 1960, and that by rather a long shot): it's a bit above 59% now, compared with almost 63.5% in January, 2007. All told, 216,000 jobs were lost in August. June and July's losses were also revised upwards, by 49,000. The 9.7% reading is the worst since July, 1983. And the U-6 measure, which includes people working part-time who need (they say "want") full-time work, broke another record, arching to 16.8% from 16.3% in July.

The average work week (thanks again, Calculated Risk!) blipped upwards, though, in a surprising--well, sort of--development. Like the employment-to population ratio, it has been undergoing a dramatic decline, but this since January of '08. It fell a almost a full hour, to 33 hours, in that short amount of time. The uptick no doubt reflects the enormous productivity gains employers are squeezing out of shellshocked workers to pad up the bottom line given the fact that they're not selling much of anything to the same shellshocked workers. Squeezing them even more should be really helpful in this regard....

Calculated Risk also shows the "diffusion index"; this shows how job losses are spread amongst the industries that make up the productive--using that term loosely, of course--economy. This is what the writer of the blog has to say about that:

Before last Summer, the all industries employment diffusion index was in the 40s, suggesting that job losses were limited to a few industries. However starting in September the diffusion index plummeted. In March, the index hit 19.6, suggesting job losses were very widespread. The index has recovered since then to 35.2 in August, suggesting job losses are not as widespread across industries as early this year - but losses continue in many industries.

The manufacturing diffusion index fell even further, from 40 in May 2008 to just 6 in January 2009. The manufacturing index has rebounded to 29.5 in August, indicating improvement, but still fairly widespread job losses across manufacturing industries.

So the outlook for US workers is more of the same: private-sector employers very reluctant to hire or invest if they can get the job done (i.e. tease out any profits) with workers who fear for their jobs (and healthcare) in a way many of them have never done before, and government stimulus either held-up or not doing very much by way of jobs creation in the first place. And the consumer spending outlook, regarding that other means to increase those profits, must remain biased on the downside. With government programs set to be drawn down, the authorities cagily mentioning "exit strategies" once again, and expensive legislation and escalating wars to be paid for, it's devilishly hard to see where those profits could possibly come from.

Labels: Calculated Risk, economic indicators, employment, real unemployment rate, unemployment

 

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9/04/2009 10:42:00 AM