Tuesday, 26 of September of 2017

Economics. Explained.  

Nonfarm Workweek

September 1, 2017

Payroll employment rose by 156 thousand in August after having risen by 189 thousand in July.  The three-month average increase in payroll employment stands at 185 thousand.

In any given month employers can boost output by either additional hiring or by lengthening the number of  hours that their employees work.  In August the nonfarm workweek fell 0.1 hour to 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 fell 0.2% in August after having risen an identical amount in July.  This suggests that the economy continues to chug along at a moderate pace.

The factory workweek fell 0.2 hour in August to 40.7 hours.  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 has begin a gradual ascent.

Overtime hours were unchanged in August at 3.3 hours.

The economy continues to expand at a respectable pace.  We currently expect GDP to rise at a 2.4% 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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