The Bureau of Labor Statistics presents the latest snapshot of jobs and employment. According to the BLS data, behind the 213,000 jobs added, the most significant gains all center around growth in durable goods, manufacturing, transportation/distribution and the ancillary business services directly connected to the blue collar sector.
In addition, April was revised up from +159,000 to +175,000, and the change for May was revised up from +223,000 to +244,000. With these revisions, employment gains in April and May combined were 37,000 more than previously reported.
To understand what is happening we must all remember the Trump MAGAnomic policies are geared toward enhancing the creation of “goods”; the production of physical “stuff”; the manufacturing and durable good sector; or put another way: Main Street/Blue Collar work. MAGAnomic policy is geared toward expanding the production base of the U.S. economy. Therefore all majority benefit will be necessarily attached to those workers and industries that are part of the expanding production base.
Blue-collar trade jobs are exploding bigly; and with that MAGA development the work hours and earnings of those who participate within the trade-production processes are showing significant gains. Work hours continue expanding and the wage rates within the MAGA-trades are also showing the most substantive gains. (Table B-2, and Table B-3)
However, with 30 years of economic policy which diminished the blue-collar-trade value, the largest portion of the U.S. workforce shifted away from trades, and/or the production of durable goods. As a consequence the non-trade driven (investment economy or service economy) is full of workers educated in pre-elizabethan poetry, arts and useless humanities (See Table B-1 and compare year-to-year). The non-trade-skilled-workers are plentiful as bank tellers, retail workers, data entry, etc. and their abundance is keeping the macro-view of wage growth artificially skewed.
Wages, hours worked and benefits for those participating in the production economy (the minority number; ie blue collar) are gaining at a much higher rate than wages and hours worked by employees outside of the production economy (the majority number). In the aggregate this gives the artificial view that wages and hours worked are not expanding at the same rate as the overall economy. This is a mistaken perspective confounding the majority of the economic punditry. Remember, we are in the space between two economic engines: A Wall Street engine, and A Main Street engine.
The economic fuel, the MAGA policy feeding the expanding economy, is being poured into the Main Street engine; the production economy. The majority benefit from the Trump policy shift is being felt by anyone and everyone attached to the production economy.
Those workers who are attached to the Wall Street economic are not gaining the same level of benefit; nor will they for the next two to four years. The workers inside the production economy will continue to experience the majority of the economic and financial benefit for the foreseeable future….. we’ve got decades of diminished economic activity to make up for.
Keep in mind, at a 30,000 ft overview, all of the current MAGA investment is pouring into plants and infrastructure. When all of those production facilities start coming on line, approximately another year or two, they start generating even more jobs toward the finished goods each plant and facility will then provide. More workers are then pulled away from the Wall Street economy and into the Main Street economy. See how that works?
[In that ‘on-line production phase’, the *overall* wages then begin to rise; because the production worker base is expanded.]
Right now all of the trade jobs, and transportation (truck drivers etc) attached to the trade jobs, are at capacity. Every raw material producer, miner, logger, and/or fabrication job professional: pipe-fitter, brick-layer, mason, welder, engineer, journeyman or apprentice therein; can make buckets of money with virtually unlimited work hours and overtime for those who can work with their hands and tools.
This is the MAGA economy; knowing how to use a pair of metal snips is WAY more valuable than a degree in gender studies. Teach a Starbucks barista how to drive a fork-lift or operate a machinist lathe and they can increase their wages exponentially.
(Via CNN) Businesses added 213,000 jobs to their payrolls in June, another strong month of gains. Employers kept hiring even as fears grew of a global trade war. The economy has added jobs every month for almost eight years, the longest streak on record.
The unemployment rate inched up to 4%, the first increase in almost a year. But even that reflected a healthy economy: It rose because more than 600,000 Americans joined the work force. The job market is so good, many people who had previously given up looking are starting again.
“It’s a good thing. There are more people coming into the labor force,” said Satyam Panday, senior economist at S&P Global Ratings. “It indicates that we have more labor market slack.”
New entrants, including blue-collar workers and teenagers, shouldn’t have much trouble finding a job. There are more openings right now than unemployed workers, leading businesses to expand hiring to historically disadvantaged groups. (read more)
Bureau of Labor Statistics DATA here.
Total nonfarm payroll employment increased by 213,000 in June and has grown by 2.4 million over the last 12 months. Over the month, job gains occurred in professional and business services, manufacturing, and health care, while employment in retail trade declined. (See table B-1.)
Employment in professional and business services increased by 50,000 in June and has risen by 521,000 over the year.
Manufacturing added 36,000 jobs in June. Durable goods manufacturing accounted for nearly all of the increase, including job gains in fabricated metal products (+7,000), computer and electronic products (+5,000), and primary metals (+3,000). Motor vehicles and parts also added jobs over the month (+12,000), after declining by 8,000 in May. Over the past year, manufacturing has added 285,000 jobs.
Employment in health care rose by 25,000 in June and has increased by 309,000 over the year. Hospitals added 11,000 jobs over the month, and employment in ambulatory health care services continued to trend up (+14,000).
Construction employment continued to trend up in June (+13,000) and has increased by 282,000 over the year.
Mining employment continued on an upward trend in June (+5,000). The industry has added 95,000 jobs since a recent low point in October 2016, almost entirely in support activities for mining.
In June, retail trade lost 22,000 jobs, largely offsetting a gain in May (+25,000).
Employment showed little or no change over the month in other major industries, including wholesale trade, transportation and warehousing, information, financial activities, leisure and hospitality, and government.
The average workweek for all employees on private nonfarm payrolls was unchanged at 34.5 hours in June. In manufacturing, the workweek edged up by 0.1 hour to 40.9 hours, and overtime edged up by 0.1 hour to 3.5 hours. (link)
Now, lets wait to see what Canada’s results show. D’0h.
Where The Jobs Were In June: Who’s Hiring And Who Isn’t
After years of monthly payroll reports padded with excessive minimum wage waiter, bartender, educator or retail worker jobs, the June jobs report was notable for its top-line beat, and which was the record 93rd straight month of US job growth, offset by strong, if disappointing, wage growth, which at 2.7% came in below than 2.8% expected, perhaps due to the preponderance of part-time jobs, but nonetheless showed continued “late cycle” strength in most components even if some negative surprises were also present.
Of note: while last month’s jobs report was truly impressive in terms of job gains by industry, with the highest paying adding the most workers, in June we saw a continuation of many of the trends observed last month:
- Continued strength in Goods Production: Mining (+4K), Construction (+13K) and especially manufacturing (+36K).
- Trade & Transportation Continued to Rebound: Wholesale (+2.9) and Truck Transportation (+2.5K).
Here the surprise was perhaps that just 2.5K trucking jobs were added, following complaints from the major trucking employers, all of whom have noted they can’t find enough people to hire, which suggests there may be an upward revision next month.
As Southbay Research notes, there were several other factors that actually depressed the seasonally adjusted number from rising as much as 250K, chief among them a sharply negative Seasonal Adjustment (-35K) which took some wind out of the June NFP sails. According to Southbay, “usually we can blame weather (as in 2016), but this is just BLS monkeying around.”
Some other highlights:
- Manufacturing (+36K): Up on auto (+12K) rebound after fire led to factory shutdowns
- Retail (-21K): Falls on weak Food (-9K) and weak Merchandise (-18K). Merchandise stores is Toys-R-Us bankruptcy layoffs
- Professional Services (+50K): Strong on the back of white collar technical workers (+25K). relatively weak Temp workers (+9K) suggests some weakness: either lack of supply (insufficient qualified workers at level of pay) or demand (employer demand is softer than surveys relate)
- Healthcare (+35K): Higher payrolls create more demand for healthcare
Looking over the past year, the following charts from Bloomberg show the industries with the highest and lowest rates of employment growth for the prior year. The latest month’s figures are highlighted.
Finally, what trends can we observe from the latest report? As Southbay summarizes, “H1 2018 has been solid and June reinforced the strength”:
- Not Seasonally Adjusted payrolls are now the highest this business cycle.
- Year-to-date Payroll (seasonally adjusted) is 213K (vs 2017 181K).
But June itself had the same level of payroll adds (not seasonally adjusted) as last year 2017. So heading into 3Q, the economy is strong but may no longer be surging faster than it was last year, same time, according to Southbay. This may also mean that the peak benefit from Trump’s fiscal policy is now behind us and going forward it will only serve to depress the economic trend line.