Wednesday, 22 of November of 2017

Economics. Explained.  

Nonfarm Workweek

November 3, 2017

Payroll employment for October jumped 261 thousand after having risen 18 thousand in September  as the combo of Hurricanes Harvey and Irma took their toll and distorted the changes in both months.

In any given month employers can boost output by either additional hiring or by lengthening the number of  hours that their employees work.  In October the nonfarm workweek was unchanged at 34.4 hours which is still relatively long.

The increase in employment combined with the workweek produces the aggregate  hours index which is a proxy for how many goods and services were produced in that month.  It rose 0.2% in October after having been unchanged in September .

The factory workweek was rose 0.2 hour in October to 41.0 from an upward revised level of 40.8 in September.  As shown below this series has been fluctuating  between 40.6 and 40.8 hours since the middle of last year.  With the prospect of both individual and corporate tax cuts likely later this year or in 2018, and U.S. firms perhaps being allowed to repatriate overseas earnings to the U.S. at a favorable tax rate, the factory sector is gathering  momentum.

Overtime hours rose 0.1 hour in October to 3.5 hours from an upward revised level for September of 3.4 hours.

The economy continues to expand at a respectable pace.  We currently expect GDP to quicken from 2.0% last year to a 2.3% pace in 2017 and 2.8% in 2018 given the prospect of both 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 housing and now manufacturing has begun to show signs of life.

Stephen Slifer


Charleston, SC

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