Total nonfarm payroll employment increased by 156,000 in August, and the unemployment rate was little changed at 4.4% according to the September 1st, U.S. Bureau of Labor Statistics, (BLS) report. Employment growth has averaged 176,000 per month thus far this year, slightly less than the average monthly gain of 187,000 in 2016. Job gains arose in manufacturing, construction, professional and technical services, health care, and mining.
Figure 1 shows the history of the total number of US workers employed in red on the left axis and the monthly change in blue on the right axis. Employment level reached a low point of 127.8 million (M), in January 2010. Since that time the economy has created 19.7M jobs.
The number of long-term unemployed (those jobless for 27 weeks or more), was unchanged in August at 1.7M and accounted for 24.7% of the unemployed. The number of persons employed part time for economic reasons was unchanged at 5.3M in August little changed in recent months. These individuals, who would have preferred full-time employment, were working part time because their hours had been cut back or because they were unable to find a full-time job. On a non-seasonally adjusted basis, 1.5M people were marginally attached to the labor force, about the same as a year earlier. These individuals were available to work and had looked for a job sometime over the past year. These folks are not counted in the labor survey since they had not searched for work in the past four weeks. Among the “marginally attached” there were 448,000 workers. This figure is 128,000 lower than in August of 2016.
Manufacturing gained 36,000 jobs in August and 155,000 since a recent low in November 2016. These jobs were created in motor vehicles and parts (+14,000), fabricated metal products (+5,000) and computer and electronic products (+4,000). Construction employment added 28,000 job in August after a five month lull. Residential specialty contractors edged up by 12,000 month on month.
The labor force participation remains low at 62.9%, where it has languished for four years, (+ or – 0.5). Structural change involving retiring baby boomers, a decline in the number of working women and more people deciding to attend college have combined to reduce the number of people seeking work.
Figure 2 presents a chart on the employment to population ratio, (Labor Force Employed of working age/Total Population). This ratio plunged from the 62 to 63 range prior the recession to the 58 to 59 level in the 2010 to 2014 timeframe. It has been steadily climbing since then reaching an average of 62.9 YTD 2017. The ratio is improving but remains well below the pre-recession level. Figure 2 also presents the employment to population ratio (same scale). This ratio is trending higher and now stands at 60.1, up from its recent low of 58.2 on October 2013.
The economic expansion is well into its eighth year and the labor market continues to exhibit strength. Companies are continuing to expand with a high degree of confidence as evidenced by ongoing strong job creation. Next month’s report will be negatively impacted by the recent hurricane activity as workers are unable to get to work since businesses are temporarily shuddered while flood waters drain and wind damage are repaired.
At Gerdau, we keep a keen eye on the employment numbers, especially manufacturing and construction since this is where most long product steel ends-up. In addition we know that growth in net job creation correlates to increased steel consumption.