Claims:

1/ Continuing claims a bit higher than I thought they would be, though still not that concerning.

We're probably going to be on a flattish trajectory in the published series for the remainder of the year due to residual seasonality. 2/ That flattish trajectory in the published series is an overly benign portrayal of what is actually happening in the underlying data, which is an ongoing slow creep upward.

1/ As with nonfarm payroll employment from the BLS, the breakeven monthly rate for ADP is much lower than it was a year ago.

Worth keeping in mind when seeing numbers like this…

https://twitter.com/nicktimiraos/status/1940387643390558393

2/ Without taking future revisions into account, we’ve had a similar trajectory to the unemployment rate in the first 5 months of this year with 124K/mo (vs 180K/mo a year earlier.)

Consider future revisions into account and we’re probably talking 154K vs 59K.

BLS charts:

1/ An increase of 139K in May, comparable to gains in the last two months (which were revised down).

My speculative hypothesis based on QCEW data through December 2024: after the eventual benchmark revision, these numbers will be closer to 70K/month. 2/ The unemployment rate is slowly creeping up, right along the track the Fed anticipated in March.

Was 4.244%, just shy of an unfavorable rounding.

Business Trends & Outlook Survey from the Census Bureau:

1/ Employers are becoming slightly less pessimistic, relative to a year earlier, about future headcount (probably reflecting less-high tariffs).

We haven't seen actual behavior (modestly contractionary) change much since 2/ The improvement in headcount plans (relative to a year ago) is coming from fewer firms planning to cut headcount, and more firms planning to expand it.

Again, they are more pessimistic than 5-6 months ago - but less pessimistic than 1-2 months ago.

Quick notes on the Q4 QCEW release this morning:

1/ TL;DR: We are very likely going to get large negative downward revisions to the growth of non-farm employment in the year from March 2024 to March 2025. 2/ To recap: the QCEW is the source data for the annual benchmark revision to nonfarm payroll employment.

The next benchmark date is March 2025. We'll get a preliminary estimate in late summer. We'll get the final benchmark revision in early February 2026.

Business hiring plans:

1/ With the reduction in US tariffs on China (from astronomical to very high levels), business hiring plans have become a little less downbeat. (Still more glum than a year ago, but the deficit is smaller.) 2/ This modest improvement in plans is due to more firms planning to increase headcount, and fewer firms planning to cut back.

But it's still true that fewer firms plan to expand than a year ago, and more firms plan to cut back than a year ago.

US employer sentiment update:

1/ US firms continue to be very pessimistic about their future headcount, but no change in that pessimism relative to 2 weeks ago.

We're not seeing any leakage, yet, from that pessimism into current action. (Soft data & hard data agree.) 2/ The deterioration in employer headcount expectations has come from both a falling share of firms planning to expand, and a rising share of firms planning to cut employment.

(But no additional worsening in the last 2 weeks.)

Thread on “hard data” vs “soft data”:

1/ Current conventional wisdom: the split between resilient “hard data” (e.g. government-published series on employment & activity) and weak “soft data” (sentiment surveys).

IMHO this CW is mostly wrong. 2/ Why wrong?

Survey/soft data that corresponds to concrete things people see at present are not that far from the hard data.

Questions about vague vibes, or about the future, look much worse.

Composite headline indices look bad because they mix "present" with vibes/future.

Jobs Report Chart Thread:

1/ Let's start with the BLS disclaimer on the report, regarding hurricane impact. 2/ Nonfarm payrolls were barely positive because of this hurricane impact (and also the Boeing strike).

Remember, an employed person who earns no money because they are absent from work counts as employed in the household survey, but non-employed in the establishment survey.

JOLTS Thread:

1/ Hiring rate rebounds to 3.5%, but no sign of an actual pause in the ongoing downward slide.

Historically consistent with an unemployment rate of ~6.5%, i.e. where we were in 2014. It's a tough time to find a job. 2/ Quits rate at 2.1%. Also gradually cooling.

Historically consistent with an unemployment rate around 4.7%, i.e. late 2016 or early 2017. This is a lukewarm labor market, not a hot one.

Claims:

1/ A generally positive report. Initial claims fell to 227K, the lowest since early July.

Still higher than they were before the summer, so hopefully we see them decline further. 2/ There was a small dip in continuing claims this week, but they are likely to keep increasing for a few more weeks before topping out around 1.9 million.

I'd be worried if the increase continues past that point (but that seems increasingly less likely).

BLS, oof.

1/ Unemployment rate increases to 4.3% in July, the highest since October 2021. 2/ Nonfarm payroll gains were soft in July (+114K).

There's some reason to believe that Hurricane Beryl depressed these numbers, as absences due to weather in the household survey were highly elevated - hourly workers not on payroll.

BLS Charts:

1/ The labor market worries get a little more to worry about today.

First off, while June's NFP gain was solid (+206K), we got large downward revisions to April and May. For the first time this year it looks like the near term trend is softening. 2/ The unemployment rate continues to creep upward (at 4.1% in June) and there seems to be more momentum in the increase than we had before.

JOLTS / "Great Stay" update for May:

1/ Hires remain unusually low relative to the unemployment rate.

Last cycle, we saw this level of hiring when the unemployment rate was around 5.5%.

The good news: the decline in hiring has slowed over the past year. 2/ Quits are only a tiny bit lower than what you'd expect given the current unemployment rate.

The fact that they're no longer falling is also a good sign. Workers' revealed preference about the state of the labor market doesn't seem to be deteriorating anymore.

CAUTION: be careful extrapolating conclusions about future BLS revisions from the Business Employment Dynamics (BDM) data.

Thread: 1/ The Business Employment Dynamics (BDM) release for Q3-23 came out today and contained an alarming nugget: the survey's estimate for net employment change was -192K - vs the CES estimate of +494K.

This has renewed the controversy over whether recent NFP data are an overcount.

What a beautiful BLS jobs report.

Let's jump into the charts.

1/ Nonfarm payroll employment continues to come in very strong. Deceleration stopped a long time ago. 2/ The unemployment rate, which was the 2nd ugliest data point of last month's jobs report, ticked back down to 3.8%.

Still need to see a lot more data to be sure we've stabilized here (unlike NFP).

Do recent QCEW data imply future downward revisions to employment?

Not necessarily.

1/ We now have 6 additional months of the quarterly census of employment & wages beyond the benchmark date (Mar-23).

The QCEW count is currently running -867K below the NFP count through Sep-23 2/ The first caution is quite apparent from the period between the 2022 & 2023 benchmarks.

QCEW wiggles around more than NFP and it's risky to infer *future revisions to NFP* from interim QCEW data.

In Sep-2022, the Y-Y NFP ran 562K behind QCEW; a month later it ran 556K ahead.

Jobs day thread:

1/ Big downward revisions to Dec & Jan (-167K), but the Feb number was quite strong (+290K).

The last three months are averaging 265K, the highest since June 2023. 2/ The unemployment rate jumped up to 3.9%, the highest since early 2022.

Claims:

1/ Slight dip in the officially released continuing claims data.

Using the 2017-18 seasonal adjustment factors, a slight increase.

No sign of ongoing deterioration in either series. (Indeed, the 2017-18 SAF shows a slight improvement over the past 6-7 weeks. 2/ We're back to slightly below (=better than) the "optimistic" trajectory I traced back during the summer.

If this sticks we'll putter around at current levels until mid April before officially released continuing claims plunge.

BLS Chart Thread

1/ Unemployment at 3.7% for the 3rd consecutive month.

No sign of ongoing deterioration here, just in the rear view. 2/ Prime working age employment population ratio rebounds from 80.4% in Dec to 80.6% in January.

Down by 0.3pp from the summer of 2023. Today's data assuages some, not all, of the worries about softening in this indicator.

Chart thread:

1/ NFP solid in December (+216K), but yet again, we got negative revisions to prior months.

The series now shows some additional, modest drift down since the summer. 2/ Unemployment thread flat at 3.7%.

The household survey had its seasonal adjustment factors revised, as expected changes are minimal, that recent spike to 3.9% was smoothed down to 3.8% though.