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Wisconsin Economic Activity in May

Summary:
Employment numbers for May were released for today. Nonfarm payroll employment and the March 2021 Outlook forecast: Figure 1: Nonfarm payroll employment from April release (blue), forecast from March 2021 Economic Outlook (teal squares), all in 000’s, seasonally adjusted. Source: BLS, DWD, and Wisconsin Department of Revenue. Nonfarm payroll employment in May was a bit below the DoR’s forecasted level for Q2, growing 1.6% annualized (3600 jobs). The halting pace of job growth could be due to any number of factors, but the argument that enhanced unemployment benefits is not clearly the cause as of May (total number of unemployed were essentially constant April to May) has not yet validated by any formal studies I’m aware of. As of May, WIsconsin NFP is down 4.6% as compared to 5%

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Employment numbers for May were released for today.

Nonfarm payroll employment and the March 2021 Outlook forecast:

Figure 1: Nonfarm payroll employment from April release (blue), forecast from March 2021 Economic Outlook (teal squares), all in 000’s, seasonally adjusted. Source: BLS, DWD, and Wisconsin Department of Revenue.

Nonfarm payroll employment in May was a bit below the DoR’s forecasted level for Q2, growing 1.6% annualized (3600 jobs). The halting pace of job growth could be due to any number of factors, but the argument that enhanced unemployment benefits is not clearly the cause as of May (total number of unemployed were essentially constant April to May) has not yet validated by any formal studies I’m aware of. As of May, WIsconsin NFP is down 4.6% as compared to 5% nationwide.

It’s important to recall the dualistic nature of the recovery, in particular the fact that high contact services employment remains more depressed than that for goods production. The recovery in accommodation and food services seems to have stalled (according to seasonally adjusted numbers), while manufacturing employment has resumed its rise.

Wisconsin Economic Activity in May

Figure 2: Wisconsin manufacturing employment release (blue), and accommodation and food services employment (red, right log scale), all in 000’s, seasonally adjusted. Source: BLS, and DWD.

Manufacturing employment is 1.1% below February 2020 levels, while accommodation and food services are down 16.5% (on a seasonally adjusted basis).

Finally, we can look at how other measures are tracking the Wisconsin economy.

Wisconsin Economic Activity in May

Figure 3: Wisconsin coincident index (black), nonfarm payroll employment (teal), and civilian employment (red), all in logs, 2020M02=0. Source: Philadelphia Fed (May 26 release), BLS via FRED and author’s calculations.

All series are rising, with nonfarm payroll employment showing the slowest growth. Civilian employment, based upon the household instead of establishment survey, shows faster growth, but is much more imprecise, and subject to large revisions. The coincident index, which aims to measure overall economic activity and is calibrated to GDP growth, shows a faster recovery than nonfarm payroll employment.

For lower frequency indicators as of May 26th (GDP, personal income) see this post.

Menzie Chinn
He is Professor of Public Affairs and Economics at the University of Wisconsin, Madison

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