Comments on July Employment Report

by Calculated Risk on 8/05/2022 10:38:00 AM

Today we celebrate the recovery of all the jobs lost in 2020, and the unemployment rate matching the lowest level since 1969.

The headline jobs number in the July employment report was well above expectations, and employment for the previous two months was revised up by 28,000, combined.   The participation rate decreased slightly, and the employment-population ratio increased slightly. The unemployment rate declined to 3.5%.

Leisure and hospitality gained 96 thousand jobs in July.  At the beginning of the pandemic, in March and April of 2020, leisure and hospitality lost 8.20 million jobs, and are now down 1.21 million jobs since February 2020.  So, leisure and hospitality has now added back about 85% all of the jobs lost in March and April 2020. 

Construction employment increased 32 thousand and is now 82 thousand above the pre-pandemic level. 

Manufacturing added 30 thousand jobs and is now 41 thousand above the pre-pandemic level.

Earlier: July Employment Report: 528 thousand Jobs, 3.5% Unemployment Rate

In July, the year-over-year employment change was 6.15 million jobs.

Prime (25 to 54 Years Old) Participation

Since the overall participation rate has declined due to cyclical (recession) and demographic (aging population, younger people staying in school) reasons, here is the employment-population ratio for the key working age group: 25 to 54 years old.

The 25 to 54 participation rate increased in July to 82.4% from 82.3% in June, and the 25 to 54 employment population ratio increased to 80.0% from 79.8% the previous month.

Both are slightly below the pre-pandemic levels and indicate almost all of the prime age workers have returned to the labor force.

Part Time for Economic Reasons

Part Time WorkersFrom the BLS report:

The number of persons employed part time for economic reasons increased by 303,000 to
3.9 million in July. This rise reflected an increase in the number of persons whose
hours were cut due to slack work or business conditions. The number of persons employed
part time for economic reasons is below its February 2020 level of 4.4 million. These
individuals, who would have preferred full-time employment, were working part time
because their hours had been reduced or they were unable to find full-time jobs.

The number of persons working part time for economic reasons increased in July to 3.924 million from 3.621 million in June. This is below pre-recession levels.

These workers are included in the alternate measure of labor underutilization (U-6) that was unchanged at 6.7% from 6.7% in the previous month. This is down from the record high in April 22.9% for this measure since 1994. This measure is lower than the 7.0% in February 2020 (pre-pandemic).

Unemployed over 26 Weeks

Unemployed Over 26 WeeksThis graph shows the number of workers unemployed for 27 weeks or more.

According to the BLS, there are 1.067 million workers who have been unemployed for more than 26 weeks and still want a job, down from 1.336 million the previous month.

This is back to pre-pandemic lows.

Summary:

The headline monthly jobs number was well above expectations and employment for the previous two months was revised up by 28,000, combined.  

The headline unemployment rate declined to 3.5%, matching the lowest level in over 50 years.  

Overall, this was another very strong employment report.

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