Tuesday, 19 of February of 2019

Economics. Explained.  

Nonfarm Workweek

February 1, 2019

In any given month employers can boost output by either additional hiring or by lengthening the number of  hours that their employees work.  Payroll employment for January jumped 304  thousand in January after having risen 222 thousand in December.

The nonfarm workweek was unchanged in January at 34.5 hours after having risen 0.1 hour in December.  The elevated level of the workweek  implies that employers are in need of workers and will continue to hire at a meaningful pace in the months ahead.

The increases in  employment and hours worked are reflected in the aggregate hours index which rose 0.3% in January to 110.9 after having climbed 0.5% in December.  This index rose 1.9% in the fourth quarter which, when coupled with a moderate increase in productivity, seems consistent with our projected 2.6% GDP growth rate for that quarter.

The factory workweek fell 0.1 hour in January to 40.8 hours after having risen 0.1 hour in December.  This series remains high and will lead to additional factory hiring in the months ahead.  With individual and corporate tax cuts continuing to impact growth this year and U.S. firms able to repatriate overseas earnings to the U.S. at a favorable tax rate, the factory sector should continue to climb at a moderate pace.

Overtime hours fell 0.1 hour in January to 3.5 hours after having risen 0.1 hour in December.  Like the factory workweek this series, too, is quite long.  The manufacturing sector is trying hard to find the workers it needs — hiring as best it can given the shortage of qualified workers, working existing employees longer hours, and asking people on the line to work more overtime hours.  There is no sign of slower growth in any of these data.

The economy continues to expand at a respectable pace.  We currently expect GDP to increase 2.7% this year after having risen 3.1% in 2018 given the continuing impact of individual and corporate income tax cuts and repatriation of corporate earnings currently locked overseas.  The economy is currently being supported by robust growth in consumer spending and now manufacturing is expanding at a moderate pace.

Stephen Slifer

NumberNomics

Charleston, SC


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