A Status Quo Jobs Report

Andrew Sullivan —  Aug 1 2014 @ 12:20pm

Jobs By Month

Suzy Khimm summarizes today’s numbers:

The U.S. economy added 209,000 jobs in July, and the unemployment rate rose slightly to 6.2%. It was the sixth straight month that the economy added more than 200,000 jobs, suggesting that the labor market is recovering steadily, though the report was slightly below economists’ predictions of 230,000 new jobs in July.

The last time the economy added 200,000 jobs every month for six months was 1997. Nonetheless, Ben Casselman posits that the “report shows a job market on cruise control, neither losing ground nor accelerating”:

Whether that’s good news or bad is a matter of perspective. On the one hand, the job market is, by pretty much any measure, the healthiest it’s been since the recession ended five years ago. Growth has topped 200,000 jobs for each of the past six months, the first time that’s happened in the recovery. Unemployment, despite July’s modest increase, has been falling steadily, and layoffs recently hit a 14-year low. Hiring has been fairly broad-based in recent months, with sectors that have been strong throughout the recovery, such as health care and energy, remaining so, while long-time laggards such as manufacturing and construction are showing signs of a rebound. Even the government has been adding jobs in recent months.

Yet for all that progress, the job market has never found a higher gear. Employers have added about 2.6 million jobs over the past year, a rate of hiring that’s risen slowly if at all over the past two years. That growth hasn’t been enough to generate meaningful wage growth — average hourly earnings were up just a penny in July — or to put the long-term unemployed back to work.

Mark Whitehouse focuses on the lackluster wage growth:

Overall, the pace of wage growth in the private sector has been remarkably slow and steady: Hourly earnings rose at an annualized rate of 2 percent over the past three months, roughly the same as over the past year and since the beginning of the recovery in mid-2009. That’s just enough to keep up with consumer price inflation, which has run at an average annual rate of 2 percent since mid-2009. … All told, though, wage gains have been meager, and still trail far behind the pace at which workers’ output per hour has increased during the recovery. A bit more of a raise should be nothing to worry about.

Vinik gives the report a once over:

On the surface, this was a soft report, but it’s not that bad as you dig deeper. The unemployment rate rising to 6.2 percent may not seem like a good thing, but it’s completely expected. As the economy continues to recover, it will draw back in workers to the labor force who had previously given up looking for work. That’s exactly what we see in this report, as the labor force participation rate rose to 62.9 percent. … It’s important to keep this all in perspective. Monthly reports are very noisy and the BLS will revise the July numbers over the next two months. A good way to cut down on that noise is by using a three-month moving average. When you use that, you see that the past few months really have seen a slight improvement in the economy:

Rolling Average

Jordan Weissmann looks on the bright side:

[A]s the Washington Post’s Zachary Goldfard notes, we’ve now managed to add at least 200,000 jobs for six months straight—the first time that’s happened since 1997. The feat was more impressive back then, since the economy and the job market were smaller. But the employment recovery has trucked along at a fairly respectable pace through a winter during which the economy shrank, and a spring in which it grew at a surprisingly quick 4 percent rate.

Neil Irwin’s read on the report:

Nothing about these numbers should change your basic assessment of how the economy is doing, unless you had some outlandish view of how the economy was doing to begin with. Gradual, steady expansion in the job market, and the economy more broadly, continues apace.

Drum’s bottom line:

Overall, the economy still appears to be dog paddling along. GDP growth is OK but not great; jobs growth is OK but not great; and wage growth is positive but not by very much. More and more, this is starting to look like the new normal.

(Chart from Irwin)