November 3, 2017

October 2017 Employment Situation Summary (110317): +261K Payroll Jobs; Prior Months Revised Up by 90K; Unemployment Rate Drops to 4.1 Pct.

Filed under: Economy,Taxes & Government — Tom @ 8:28 am


Will have to catch up on not seasonally adjusted benchmarks after report is released.

It will be here at 8:30.

HERE IT IS (permanent link with tables): Lower unemployment rate, but fewer jobs than predicted, with huge upward prior month revisions —

Total nonfarm payroll employment rose by 261,000 in October, and the unemployment rate edged down to 4.1 percent, the U.S. Bureau of Labor Statistics reported today. Employment in food services and drinking places increased sharply, mostly offsetting a decline in September that largely reflected the impact of Hurricanes Irma and Harvey. In October, job gains also occurred in professional and business services, manufacturing, and health care.

Household Survey Data

The unemployment rate edged down by 0.1 percentage point to 4.1 percent in October, and the number of unemployed persons decreased by 281,000 to 6.5 million. Since January, the unemployment rate has declined by 0.7 percentage point, and the number of unemployed persons has decreased by 1.1 million.

Among the major worker groups, the unemployment rates for adult women (3.6 percent) and Whites (3.5 percent) declined in October. The jobless rates for adult men (3.8 percent), teenagers (13.7 percent), Blacks (7.5 percent), Asians (3.1 percent), and Hispanics (4.8 percent) showed little change.

In October, the number of long-term unemployed (those jobless for 27 weeks or more) was little changed at 1.6 million and accounted for 24.8 percent of the unemployed.

The labor force participation rate decreased by 0.4 percentage point to 62.7 percent in October but has shown little movement on net over the past 12 months. The employment-population ratio declined by 0.2 percentage point over the month to 60.2 percent, after increasing by 0.3 percentage point in September. The employment-population ratio is up by 0.5 percentage point over the year.

… Establishment Survey Data

Total nonfarm payroll employment increased by 261,000 in October, after changing little in September (+18,000). Employment in food services and drinking places increased sharply over the month, mostly offsetting a decline in September that largely reflected the impact of Hurricanes Irma and Harvey. In October, employment also increased in professional and business services, manufacturing, and health care.

Employment in food services and drinking places rose sharply in October (+89,000), following a decrease of 98,000 in September when many workers were off payrolls due to the hurricanes.

Professional and business services added 50,000 jobs in October, about in line with its average monthly gain over the prior 12 months.

Manufacturing employment rose by 24,000 in October, with job gains in computer and electronic products (+5,000) and chemicals (+4,000). Employment in fabricated metals continued to trend up (+4,000). Manufacturing has added 156,000 jobs since a recent employment low in November 2016.

Health care added 22,000 jobs in October. Employment in ambulatory health care services continued to trend up over the month (+16,000). Health care has added an average of 24,000 jobs per month thus far in 2017, compared with an average gain of 32,000 per month in 2016.

Employment in other major industries, including mining, construction, wholesale trade, retail trade, transportation and warehousing, information, financial activities, and government, changed little in October.

The average workweek for all employees on private nonfarm payrolls was unchanged at 34.4 hours in October. In manufacturing, the workweek increased by 0.2 hour to 41.0 hours, and overtime edged up by 0.1 hour to 3.5 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls edged up by 0.1 hour to 33.7 hours.

Average hourly earnings for all employees on private nonfarm payrolls, at $26.53, were little changed in October (-1 cent), after rising by 12 cents in September. Over the past 12 months, average hourly earnings have increased by 63 cents, or 2.4 percent. In October, average hourly earnings of private-sector production and nonsupervisory employees, at $22.22, were little changed (-1 cent).

The change in total nonfarm payroll employment for August was revised up from +169,000 to +208,000, and the change for September was revised up from -33,000 to +18,000. With these revisions, employment was 90,000 higher than previously reported. (Monthly revisions result from additional reports received from businesses and government agencies since the last published estimates and from the recalculation of seasonal factors.) After revisions, job gains have averaged 162,000 over the last 3 months.

I’ll look at the not seasonally adjusted numbers and will have other observations shortly.

Not seasonally adjusted data and seasonal conversion: The raw adds were 1.042 million in total nonfarm and 603K in the private sector, which translated to the 261K seen above for total nonfarm and 252,000 in the private sector. Analysis is pending until data become available. Update: The seasonal conversions look okay.

UPDATE: Observations (numbers are seasonally adjusted unless otherwise indicated) —

  • Unless it moves backward in November, September’s reported job loss is now a jobs gain, and the nearly eight-year streak of monthly employment gains, thought to have ended last month, is now at 85.
  • The malaise indicators, which have showed signs of turning around, went the wrong way in October. The labor force shrunk by 765,000, and is now only 738,000 greater than 12 months ago. I suspect there will be a big bounceback in November, because during the reference week of October 12, many people had dropped out under BLS’s quirky requirements for being considered in the labor force due to the hurricanes.
  • Household Survey employment fell by 484,000 after rising by 906,000 last month.
  • The not in labor force number increased by almost a million to 95.385 million.
  • So the participation and employment population ratios dropped. Frankly, the BLS month-to-month Household Survey figures aren’t handling the hurricanes well. Hopefully, they’ll right themselves in November and December.
  • Black unemployment rates went up sharply in October, after dropping sharply in September.
  • Looking longer-term for full- and part-time employment, the former is up by 2.477 million in the past 12 months, while the latter is down by 535,,000.
  • U-6, fully loaded unemployment dropped to 7.9 percent from 9.5 percent 12 months ago.
  • In payroll jobs, BLS still trails ADP by well over 400,000 in reported private-sector job additions this year.
  • This month’s one-cent fall in hourly earnings isn’t helpful, but September’s 12-cent gain offsets it. What likely happened is that low-wage workers let go or who couldn’t work during the hurricane came back to work. One example: the 89,000 food service and drinking places jobs added mentioned in BLS’s report.

Overall: The 351K in total job adds, including prior-month revisions, is good news, but the unemployment rate drop occurred for all the “wrong” reasons. Given the impact of the hurricanes, we’ll have to wait until November and December to see whether the latter item is a cause for concern.



  1. With the effect of the hurricanes really screwing up September’s numbers, I’d suggest using a 2-month instead of a 1-month window in the comparisons.

    The Household survey is rather disappointing. Participation and employment both crashed (-0.4 points on participation, -0.2 points on employment)

    Comment by steveegg — November 3, 2017 @ 8:47 am

  2. I think the hurricanes affected the participation numbers as well, given that the reference week was Oct. 9-15. I don’t think we’re going to have clean, unaffected by the storm figures until December.

    Comment by Tom — November 3, 2017 @ 9:23 am

  3. Birth – Death Model may need adjustment:

    US birth rates fall as deaths from age-related diseases climb according to the CDC’s latest quarterly estimates

    Comment by dscott — November 3, 2017 @ 4:42 pm

  4. I should look at Birth-Death more often. But BLS’s is a BUSINESS birth-death model:

    October is a particularly big month for net positive births:
    - This year, +216K
    - Last year, +237K

    This is against the total RAW job adds of 1.042 million.

    As to the CDC birth-death mortality issue you raise, that will come out in the annual population controls when adjusted in January.

    Comment by Tom — November 3, 2017 @ 7:37 pm

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