Part 1 - The real unemployment rate – June 4th

Part 1 - The real unemployment rate – June 4th  

Bottom Line: It's always that case that there's a lot more to a monthly employment picture than the jobs added or lost and base reported unemployment rate. Some months are especially telling and consequential and that's the kind of month May was for employment in the US.  

Here are some keys in the report before digging all of the way in:  

  • Headline unemployment rate 3.8% (down from 3.9% lowest since April of 2000)   

  • 223,000 jobs added in May (vs 137,000 new jobs in May '17  

  • More revisions totaling a positive 15,000 jobs rolled in from prior months for a net monthly gain of 238,000 jobs 

Top industries for hiring:       

  • #1 Retail trade (added 31,000 jobs)         

  • #2 Healthcare (added 29,000 jobs)     

  • #3 Construction (added 25,000 jobs) 

Now for the real unemployment rate once underemployed and long-term unemployed people are accounted for:       

  • Actual: 7.6% down from 8.4% yoy (The lowest it's been in exactly 17 years (May 2001) 

Three additional relevant points:         

1. When the long-term unemployed & marginally employed are factored in - the real unemployment is still double the base reported rate  

2. The forgotten folks include 1.2 million are long-term unemployed (improvement of 100,000), 4.9 million are underemployed (improvement of 100,000) & 1.5 million are marginally attached to the workforce (100k increase). 100,000 net improvement month over month  

3. The labor participation rate dipped to 62.7% (-.1% - lowest since January)    

In context this report looks better than it initially appears. 15,000 more jobs added through revisions. 100,000 additional jobs added for those not counted in the base unemployment rate meaning that the labor market is improving enough that they're getting opportunities as well. And of course, the headliners... Lowest unemployment rate in over 18 years and lowest real unemployment rate in 17. Pretty impressive. 

In part two we'll look at the demographics of the unemployed...     

 

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