Part 1 - The real unemployment rate for July 10th:
Bottom Line: On Friday, the BLS produced an employment report which had some decent news, some good news and as usual lots of hidden information that tells the real story of our labor market.
- The headline jobs number for June: +222,000 jobs
- Headline unemployment rate 4.4%
- Positive jobs revisions for prior months
- Millions unaccounted for by the base reported unemployment rate
It's hard to know what's real with regard to job growth. ADP's private sector report was weaker in June just as the Government number was stronger. The government number had massive revisions for jobs gains in May and April that brought those months closer to the ADP report (which has historically proven to be more accurate once all revisions are accounted for). So let's take a look at the June government report and what really happened that led to 222,000 jobs being added:
Top industries for hiring:
- #1 Healthcare
- #2 Social assistance
- #3 Financial
- #4 Mining!
Financial services and mining were devastated industries under the heavy burdens placed by the Obama administration. These are clearly Trump specific stories as he's worked to repeal many crippling regulations impacting these industries. Next the revisions:
- +47,000 jobs
Now let's take a look at the reported unemployment rate at 4.4%. This was up from 4.3% coming out of May. 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: 4.4%, down from 4.9% (year over year improvement of 10.2%)
- Actual: 8.6% down from 9.6% (year over year improvement of 10.4%)
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, 5.3 million are underemployed (part-time seeking full-time work) & 1.6 million are marginally attached to the workforce
3. The labor participation rate improved from 62.7% to 62.9%
In part two we'll take a look at the demographics of the unemployed.