June 4, 2021

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 rose by 559  thousand in May.  In addition to hiring people, businesses can also lengthen the hours of existing employees.  The nonfarm workweek was unchanged in May at 34.9 hours after having been unchanged in April.  The May level of 34.9 hours is just a shade below the record high level of 35.0 hours that was set in January.  The reality is that employers are having considerable difficulty finding workers for a variety of reasons — a lack of appropriate skills, an inability to pass the requisite drug test, and generous employment benefits amongst them.

The changes in  employment and hours worked are reflected in the aggregate hours index which rose 0.5% in May to 108.0 after having risen 0.2% in April and 1.4% in March.  We projected this index will rise 5.4% in the second quarter which is consistent with our projected 10.0% GDP growth rate for that quarter (the forecast implicitly assumes that productivity will rise 4.6% in Q2.

The factory workweek rose 0.1 hour in May to 40.5 hours after having fallen 0.1% in April.  The manufacturing sector continues to recover from the March/April 2020 recession.

Overtime hours rose 0.1 hour in May to 3.3 hours after having fallen 0.1 hour in April.

Stephen Slifer


Charleston, SC