A Closer Look at the Nonfarm Payroll Data…

In this weekend update, we are going to take a closer look at the nonfarm payroll data.

You may recall from the previous month’s nonfarm payroll, there was 33,000 net job losses which was attributed to three hurricanes. Although the news was negative, the data was dismissed for the most part due to the weather being seen as a short term impact to the job market.

This month, the jobs data showed an increase of 261,000 jobs and last month’s data was revised higher from a job loss to a job increase of 18,000. The unemployment level dropped to 4.1% which is the lowest unemployment level in 17 years. This all sounds extremely positive until we take a closer look at the data. First the jobs data missed analyst expectations of a 312,000. Average hourly earnings did not increase which also missed expectation.

Drilling down deeper into the data, we see the unemployment data is not a complete picture of the situation. The total civilian labor force level dropped from 161,146,000 to 160,381,000, a drop of 765,000 in the total work force. In addition of a total drop in number of people being counted in the labor force, we saw a drop in the participation rate of 0.4% to 62.7%. Despite the drop in unemployment the total employed also dropped from 154,345,000 to 153,861,000. The total number of employed people dropped by 484,000 and the number of discouraged workers (workers that would like a job but stopped looking out of discouragement) by 103,000 to 524,000 people that aren’t being counted in the workforce.

Overall, we are seeing less people on unemployment but less people employed and less people being counted in the workforce. Income is not increasing which means individuals are not making more and are not as likely to seek employment. If we see jobs continue to increase, more total employed people, and higher wages, this is not only a big positive to the workforce but for the economy as well.