Part 1 - The real unemployment rate for June 5th:
Bottom Line: On Friday, the BLS produced an employment report which was confounding.
- The headline jobs number for May: +138,000 jobs
- Headline unemployment rate 4.3%
- Plus negative jobs revisions for prior months
- More than 100,000 fewer private sector jobs added compared to the ADP Report which looked like private sector employment was really strong
It's hard to know what's real with regard to job growth. If you look at the ADP Report's through May, all but one month in 2017 has produced strong jobs growth and we've added 30%+ more jobs year over year. If you look at the government report we've added fewer jobs than at the same point in 2016. Historically the ADP Report has proven to be slightly more accurate than the government report once all revisions are in so it's worth watching that trend going forward.
First let's take a look at the reported unemployment rate at 4.3%. This was down from 4.4% coming out of April. As we know that doesn't account for the long term unemployed. So each month I bring you the real unemployment rate.
This first entry is specific to what the real unemployment rate is and how labor participation factors into this important story:
- Government reported unemployment rate: 4.3%, down from 4.7% year over year (-9.3%)
- Actual: 8.4% down from 9.7% year over year (-13.4%)
So here are three relevant points:
1. When the long-term unemployed & marginally employed are factored in the real unemployment rate remains nearly double the base reported rate
2. 1.7 million are long-term unemployed, 5.2 million are underemployed (part-time seeking full-time work) & 1.5 million are marginally attached to the workforce
3. The labor participation rate dropped from 62.9% to 62.7% - this is one least optimistic numbers in the bunch
In part two we'll explore the demographics of the unemployed...