Statistical mess: paychecks and unemployment are on the rise in the US. How can this happen?
The economy sometimes appears a bit like a supermarket in which everyone can search and buy, or rather sell, the data they like. Except then the explanation of the data exists, but it's a bit more complex than it appears at first glance.
Let's start with payroll: The US economy unexpectedly added 339,000 jobs in May 2023, the most in four months, far exceeding market forecasts of 190,000. Data for March and April were revised upwards, bringing employment 93,000 higher than previously reported. In May, the increase in jobs occurred in professional and business services (64,000), i.e. professional, scientific and technical services; in public administration (56,000); in health care (52,000); in the leisure and hospitality sector (48,000); in construction (25,000); in transport and warehousing (24,000); and in social welfare (22,000).
Employment remained unchanged over the month in other major sectors including mineral extraction, quarrying and oil, manufacturing, wholesale, retail, information, finance and the other services. Data continues to point to a tight labor market, with average employment rising by 314,000 per month so far this year. The leisure and hospitality sector is still growing, averaging 77,000 jobs per month over the past 12 months. Here is the related graph
And now unemployment instead: the unemployment rate in the United States rose to 3.7% in May 2023, the highest value since October 2022 and higher than market expectations of 3.5%. Despite this increase, the unemployment rate remained historically low and suggested that the labor market remained tight. The number of unemployed increased by 440,000 to 6.10 million, while employment levels decreased by 310,000 to 160.72 million.
The so-called U-6 unemployment rate, which also includes people who would like to work but have given up looking and those who work part-time because they can't find full-time work, rose to 6.7% in May, even surpassing forecasts by 6.6%. The labor force participation rate remained unchanged at 62.6%, remaining at its highest level since March 2020. Here is the unemployment chart:
How can jobs, the unemployed and the inactive increase? Simply:
- there are more jobs;
- but many companies are making layoffs, and this explains the number of unemployed and people who give up looking for work;
- active workers are forced to work multiple jobs in order to pay off debts and make ends meet.
In the US system it is normal to work two, and sometimes three, jobs to make ends meet and pay off credit cards. In this case we have more and more workers who are forced to make this decision, explaining the strangeness of a rising unemployment rate. against more jobs and a stable labor force participation rate.
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The article Statistical mess: payrolls and unemployment are on the rise in the USA. How can this happen? comes from Economic Scenarios .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/pasticcio-statistico-negli-usa-aumentano-le-buste-paga-e-i-disoccupati-come-puo-succedere/ on Sat, 03 Jun 2023 07:00:31 +0000.