BLBG: Jobs-Day Guide: U.S. Payrolls, Participation, Wages and Hours
Here’s what to look for when the Labor Department releases the August U.S. employment report today at 8:30 a.m. in Washington:
-- Payrolls, jobless rate: The median forecast in a Bloomberg survey of economists projects 230,000 workers were added last month after a 209,000 increase in July. Such a gain would match this year’s average and, if sustained, would make 2014 the strongest in 15 years. The jobless rate is forecast to fall to 6.1 percent in August from 6.2 percent.
-- “The labor market definitely is doing better,” said Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities Inc. in New York. He forecasts an employment gain of 200,000 in payrolls and advises to watch for tweaks to past months’ data, which “have clearly shown a significant tendency for upward revisions.”
-- Federal Reserve officials led by Janet Yellen are gauging the strength of the labor market as they wind down their
bond-buying program aimed at boosting economic growth. Policy makers, who next meet on Sept. 16-17, tapered monthly security purchases to $25 billion in July. It marked their sixth consecutive $10 billion cut as they stay on pace to end the program in October.
Wages, Hours
-- Wages, hours: Average hourly earnings of all workers, including supervisors, are forecast to climb 2 percent in August from the same month last year, matching the average of the expansion that began in June 2009. From 2000 through 2007, earnings for non-supervisory workers alone rose an average 3.2 percent a year. The average workweek is seen holding at 34.5 hours in August.
-- Stagnant wage growth has been a concern for some Fed officials who view it as a symptom of significant labor-market slack. The value of compensation per hour has climbed by just 0.5 percent after inflation since 2009, marking the weakest wage growth since World War II, according to Bureau of Labor Statistics data compiled by Bloomberg.
-- “The only thing lagging right now is wages,” said Joel Naroff, president and chief economist at Naroff Economic Advisors Inc. in Holland, Pennsylvania. “Companies are still being extraordinarily picky and they’re not willing to pay up.”
-- Pending further improvement in the economy, “measures of average hourly earnings will creep higher as the year progress and the labor market edges further into the expansion phase,” Jefferies LLC economists led by Ward McCarthy wrote in a Sept. 2 e-mail to clients. That “sets the stage for faster income growth and consumer spending.”
Participation Rate
-- Participation rate: After its continued decline deepened concerns about slack in the jobs market, labor force participation has shown signs of stabilizing since the end of 2013. The share of working-age Americans either employed or looking for a job rose to 62.9 percent in July from 62.8 percent a month earlier that matched the lowest since 1978.
-- “The flattening out of the labor force participation rate since late last year could partly reflect discouraged workers rejoining the labor force in response to the significant improvements that we have seen in labor market conditions,” Yellen said in a Aug. 22 speech at Kansas City Fed’s economic conference in Jackson Hole, Wyoming.
-- The most bullish scenario would be a large jump in the household survey’s measure of employment, “which would allow the participation rate to increase and the unemployment rate to decrease,” Michael Shaoul, chief executive officer at Marketfield Asset Management LLC in New York, wrote in an e-mail. “That is more possible than most people realize.”
Hiring Breadth
-- Diffusion index: Economists will also be looking at the breadth of gains, especially in industries that lend insight on the strength of the recovery. The Labor Department’s diffusion index, which measures the range of industries taking on workers, has been above 60 percent for six of the past seven months. That’s “a good sign,” said Russell Price, senior economist at Ameriprise Financial Inc.
-- Payrolls at manufacturers, which tend to pay higher wages, are seen climbing by 18,000, according to the Bloomberg survey median. Recent data, including this week’s ISM reports on manufacturing and service industries, indicate more companies are hiring.
To contact the reporter on this story: Victoria Stilwell in Washington at vstilwell1@bloomberg.net
To contact the editors responsible for this story: Carlos Torres at ctorres2@bloomberg.net Vince Golle
