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THE EMPLOYMENT SITUATION—NOVEMBER 2018

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Total nonfarm payroll employment increased by 155,000 in November, and the unemployment rate remained unchanged at 3.7 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in health care, in manufacturing, and in transportation and warehousing.


Household Survey Data

In November, the unemployment rate was 3.7 percent for the third month in a row, and the number of unemployed persons was little changed at 6.0 million. Over the year, the unemployment rate and the number of unemployed persons declined by 0.4 percentage point and 641,000, respectively.

Among the major worker groups, the unemployment rates for adult men (3.3 percent), adult women (3.4 percent), teenagers (12.0 percent), Whites (3.4 percent), Blacks (5.9 percent), Asians (2.7 percent), and Hispanics (4.5 percent) showed little or no change in November.

The number of long-term unemployed (those jobless for 27 weeks or more) declined by 120,000 to 1.3 million in November. These individuals accounted for 20.8 percent of the unemployed.

Both the labor force participation rate, at 62.9 percent, and the employment-population ratio, at 60.6 percent, were unchanged in November.

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers), at 4.8 million, changed little in November. 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.

In November, 1.7 million persons were marginally attached to the labor force, an increase of 197,000 from a year earlier. (Data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey.

Among the marginally attached, there were 453,000 discouraged workers in November, essentially unchanged from a year earlier. (Data are not seasonally adjusted.) Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. The remaining 1.2 million persons marginally attached to the labor force in November had not searched for work for reasons such as school attendance or family responsibilities.


Establishment Survey Data

Total nonfarm payroll employment increased by 155,000 in November, compared with an average monthly gain of 209,000 over the prior 12 months. In November, job gains occurred in health care, in manufacturing, and in transportation and warehousing.

Health care employment rose by 32,000 in November. Within the industry, job gains occurred in ambulatory health care services (+19,000) and hospitals (+13,000). Over the year, health care has added 328,000 jobs.

In November, manufacturing added 27,000 jobs, with increases in chemicals (+6,000) and primary metals (+3,000). Manufacturing employment has increased by 288,000 over the year, largely in durable goods industries.

Employment in transportation and warehousing rose by 25,000 in November. Job gains occurred in couriers and messengers (+10,000) and in warehousing and storage (+6,000). Over the year, transportation and warehousing has added 192,000 jobs.

In November, employment in professional and business services continued on an upward trend (+32,000). The industry has added 561,000 jobs over the year.

Retail trade employment changed little in November (+18,000). Job growth occurred in general merchandise stores (+39,000) and miscellaneous store retailers (+10,000). These gains were offset, in part, by declines in clothing and clothing accessories stores (-14,000); electronics and appliance stores(-11,000); and sporting goods, hobby, and book stores (-11,000).

Employment in other major industries—including mining, construction, wholesale trade, information, financial activities, leisure and hospitality, and government—showed little change over the month. 

The average workweek for all employees on private nonfarm payrolls decreased by 0.1 hour to 34.4 hours in November. In manufacturing, both the workweek and overtime were unchanged (40.8 hours and 3.5 hours, respectively). The average workweek for production and nonsupervisory employees on private nonfarm payrolls held at 33.7 hours.

In November, average hourly earnings for all employees on private nonfarm payrolls rose by 6 cents to $27.35. Over the year, average hourly earnings have increased by 81 cents, or 3.1 percent. Average hourly earnings of private-sector production and nonsupervisory employees increased by 7 cents to $22.95 in November.

The change in total nonfarm payroll employment for October was revised down from +250,000 to +237,000, and the change for September was revised up from +118,000 to +119,000. With these revisions, employment gains in September and October combined were 12,000 less than previously reported. (Monthly revisions result from additional reports received from businesses and government agencies since the last published estimates and from the recalculation of seasonal factors.) After revisions, job gains have averaged 170,000 per month over the last 3 months.

PRODUCTIVITY AND COSTS: Third Quarter 2018, Revised

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Nonfarm business sector labor productivity increased 2.3 percent during the third quarter of 2018, the U.S. Bureau of Labor Statistics reported today, as output increased 4.1 percent and hours worked increased 1.8 percent. (All quarterly percent changes in this release are seasonally adjusted annual rates.) From the third quarter of 2017 to the third quarter of 2018, productivity increased 1.3 percent, reflecting a 3.7-percent increase in output and a 2.3-percent increase in hours worked.

Labor productivity, or output per hour, is calculated by dividing an index of real output by an index of hours worked by all persons, including employees, proprietors, and unpaid family workers.

Unit labor costs in the nonfarm business sector increased 0.9 percent in the third quarter of 2018, reflecting a 3.1-percent increase in hourly compensation and a 2.3-percent increase in labor productivity. Unit labor costs also increased 0.9 percent over the last four quarters.

BLS calculates unit labor costs as the ratio of hourly compensation to labor productivity. Increases in hourly compensation tend to increase unit labor costs, and increases in output per hour tend to reduce them.

Manufacturing sector labor productivity increased 1.0 percent in the third quarter of 2018, as output increased 4.1 percent and hours worked increased 3.1 percent. Productivity increased 1.7 percent in the durable manufacturing sector, as output rose 5.2 percent and hours worked increased 3.5 percent. In the non-durable goods manufacturing sector, a 0.5-percent rise in productivity reflected a 2.9-percent increase in output and a 2.4-percent increase in hours worked. Over the last four quarters, total manufacturing sector productivity increased 1.4 percent, as output increased 3.6 percent and hours worked increased 2.1 percent. Unit labor costs in manufacturing decreased 1.2 percent in the third quarter of 2018 and also decreased 1.2 percent from the same quarter a year ago.

The concepts, sources, and methods used for the manufacturing output series differ from those used in the business and nonfarm business output series; these output measures are not directly comparable.

Preliminary third-quarter 2018 measures of productivity and costs were announced for the nonfinancial corporate sector. Productivity increased at a 5.5-percent annual rate in the third quarter of 2018 and increased 1.9 percent over the last four quarters. Unit labor costs decreased 2.1 percent in the third quarter of 2018 and were unchanged (0.0 percent) over the last four quarters. Unit profits—a measure available only for the nonfinancial corporate sector—increased at a 14.4-percent annual rate in the third quarter of 2018. A four-quarter increase in unit profits of 11.1 percent is the largest since the first quarter of 2012, when the measure increased 18.8 percent.


Revised measures

Measures released today are based on more recent source data than were available for the preliminary report. Regular updates of source data from the BLS, the Bureau of Economic Analysis (BEA), and the Board of Governors of the Federal Reserve System are reflected in data for the second and third quarters of 2018.     

In the third quarter of 2018, nonfarm business labor productivity increased 2.3 percent—about the same as the preliminary estimate of 2.2 percent—as both output and hours worked increased at the same rates reported November 1. Unit labor costs were revised down 0.3 percentage point due primarily to a downward revision to hourly compensation. In the manufacturing sector, productivity increased 1.0 percent rather than 0.5 percent as previously reported, as an upward revision to output was greater than an upward revision to hours worked. Unit labor costs were revised from a 0.9-percent increase to a 1.2-percent decline for the third quarter of 2018—the combined effect of the upward revision to productivity and a downward revision to hourly compensation.

In the second quarter of 2018, labor productivity, output, and hours worked were unrevised for the nonfarm business sector. Unit labor costs decreased 2.8 percent, rather than decreasing 1.0 percent as previously reported, due to a downward revision to hourly compensation. Productivity, output, and hours worked were also unrevised in the manufacturing sector. A large downward revision to manufacturing hourly compensation resulted in a similar downward revision to unit labor costs; after revision, unit labor costs fell 6.1 percent in the second quarter of 2018, in contrast to the 0.1 percent increase reported previously. In the nonfinancial corporate sector, productivity decreased 1.9 percent rather than 0.9 percent as reported November 1, due solely to a downward revision to output; hours were unrevised. Because hourly compensation was revised down by more than productivity, unit labor costs increased less than previously reported. 

How Payless Got People to Pay Hundreds for Its Shoes

Would you pay $640 for a pair of Payless shoes? You might think the answer is “absolutely not,“ but you haven’t been to Palessi. In a recent ad campaign/social experiment, Payless took over a former Armani storefront in Santa Monica, Calif., and set up a fake luxury shoe boutique, Palessi. Attendees of the grand opening party (“fashion influencers” invited by Palessi, er, Payless) had no idea things were not as they seemed, and yes, $640 was the top price paid for the $19.99 and $39.99 shoes on display, Adweek reports.

A whopping $3,000 was spent in just a few hours on the actually cheap shoes, but Payless returned the money after the truth was revealed—and let the attendees keep the shoes they picked out. The shocked reactions of people who just found out the shoes they were calling “elegant” and “sophisticated” were actually from Payless are included in the resulting ads. The stunt “helped the brand prove that a price point doesn’t dictate style,“ Bustle declares. But one marketing expert notes the whole thing is also “a commentary ... on the discernment—or lack thereof—among fashion influencers.“

Apple Is No Longer Most Valuable Public Company

The Free Press WV

Microsoft’s big bet on cloud computing is paying off as the company has surpassed Apple as the world’s most valuable publicly traded company, per the AP. The software maker’s prospects looked bleak just a few years ago, as licenses for the company’s Windows system fell with a sharp drop in sales of personal computers. But under CEO Satya Nadella, Microsoft has found stability by focusing on software and services over the internet, or the cloud, with long-term business contracts. Apple had been the world’s most prosperous firm since claiming the top spot from Exxon Mobil earlier this decade. Microsoft surpassed Apple briefly a few times this week, but didn’t close on top until Friday, with a market value of $851 billion to Apple’s $847 billion. Microsoft hadn’t been at the top since the height of the dot-com boom in 2000.

Microsoft became a contender again in large part because Apple’s stock fell nearly 20% in November, while Microsoft hasn’t done any worse than the rest of the stock market. The success is a reflection of its steady focus on business customers in recent years. Windows is now a dwindling fraction of Microsoft’s business. While the company still runs consumer-focused businesses such as Bing search and Xbox gaming, it has prioritized business-oriented services such as its Office line of email and other workplace software, as well as newer additions such as LinkedIn and Skype. But its biggest growth has happened in the cloud, particularly the cloud platform it calls Azure. Cloud computing now accounts for more than a quarter of Microsoft’s revenue, and Microsoft rivals Amazon as a leading provider of such services.

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