October 6, 2006

The Employment Report Run-up

Filed under: Economy,Taxes & Government — Tom @ 8:10 am

It’s the second last employment report before the election. Bloomberg’s survey of economists and analysts predicts a decent 115,000-plus pickup during September in total employment. ADP’s National Employment report earlier in the week claimed that there were only 78,000 new jobs in “nonfarm private employment” (an important distinction, because the government reports on ALL employment).

I think any six-figure number will be politically unassailable, especially if the unemployment rate either falls or doesn’t rise. It will also be worth noting if the new-jobs divergence between the Household Survey (used as the basis for reporting the unemployment rate) and the Establishment Survey (used as the basis for reporting the number of new jobs) continues. As noted previously, the former shows that almost 8.9 million net new jobs have been created since January of 2002, while the latter only shows just under 4.9 million net new jobs. After over 4-1/2 years, the idea that one report shows 80% more new jobs created than the other is ridiculous.

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UPDATE: Call it 3/4 of a loaf

  • Unemployment dropped 0.1% to 4.6%. (that’s a BIG plus, 1/2 loaf)
  • 51,000 net new nonfarm payroll jobs were created per the Establishment Survey. (not impressive). But August’s net new jobs number was revised upward by 60,000, and July’s by 2,000, meaning that the number of people reported as working at the end of September was up by 113,000. But September itself still disappointed a bit.
  • 101,000 net new jobs were created per the Household Survey. (just over the threshold set before the release, or 1/4 loaf)

Once again, the Household Survey shows more impressive job growth than the Establishment Survey.

Anyone who whines about “unimpressive job-growth numbers” without mentioning the fact that the unemployment rate went down or ignoring the prior-month revisions just mentioned is deliberately not telling the whole story. And the inevitable political arguments that will be made about “marginally attached workers” and “discouraged workers” won’t fly either, as those respective numbers have gone down and stayed the same, respectively (from Page 2 of today’s release):

About 1.3 million persons (not seasonally adjusted) were marginally attached to the labor force in September, down from 1.4 million a year earlier. These individuals wanted and were available for work and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey. Among the marginally attached, there were 325,000 discouraged workers in September, about unchanged from a year earlier. Discouraged workers were not currently looking for work specifically because they believed no jobs were available for them. The other 975,000 marginally attached had not searched for work in the 4 weeks preceding the survey for reasons such as school attendance or family responsibilities.

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