Just a quick update on today’s employment report. See our friends over at the Employment Department for the official release.
The latest employment report for Oregon shows healthy job gains from the employer survey in July but a large increase in the unemployment rate from the household survey. What’s going on here? The first answer is always that real time survey data is noisy. It will be revised and benchmarked over the coming months. The second answer, from a purely atheoretical perspective, the unemployment rate is simply reverting to the post-Great Recession trend. The plunge in the unemployment rate in early 2015 likely overstated the improvements in the economy, even with job growth at full-throttle. The large increases in the past couple of months likely understates the improvements in the economy, even with job growth still at full-throttle.
The bigger picture here is that we literally need a higher unemployment rate given the underlying dynamics we have seen in recent years with a low participation rate and the like, provided of course it is higher due to more Oregonians looking for work. Unfortunately, the labor force figures show losses in 2015 again following some good gains in 2014. With job opportunities still quite strong, it should and will pull more workers back into the labor force. That’s not really being shown in the 2015 data so far which is discouraging, particularly because we’re making good gains in the share of Oregonians with a job and our wage growth is strong. For the time being our office is still chalking much of this up to the underlying noisy data.
Our focus is right now is on the job gains, the employment-population ratio, migration flows and wage growth which all point to strong gains here in Oregon. However we do have a keen eye on the labor force participation rate, adjusting for demographic trends, although that is still quite low today and not showing the gains most other indicators are.