October 5, 2018

September 2018 Employment Situation Summary (100518): 49-YEAR LOW Jobless Rate (3.7Pct.); 134K Jobs Added (But Seasonal Conversions VASTLY OVERSTATE Strength); Prior-Month Revisions Add Another 87K; Average Hourly Wage Up 25 Cents in 3rd Quarter (3.75 Pct. Compound Annual Rate)

Filed under: Economy,Taxes & Government — Tom @ 6:42 pm

From the Bureau of Labor Statistics (permanent link to full text with all tables):

The unemployment rate declined to 3.7 percent in September, and total nonfarm payroll employment increased by 134,000, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in professional and business services, in health care, and in transportation and warehousing.

Household Survey Data

The unemployment rate declined by 0.2 percentage point to 3.7 percent in September, and the number of unemployed persons decreased by 270,000 to 6.0 million. Over the year, the unemployment rate and the number of unemployed persons declined by 0.5 percentage point and 795,000, respectively.

Among the major worker groups, the unemployment rates for adult women (3.3 percent) and Whites (3.3 percent) declined in September. The jobless rates for adult men (3.4 percent), teenagers (12.8 percent), Blacks (6.0 percent), Asians (3.5 percent), and Hispanics (4.5 percent) showed little or no change over the month.

The number of long-term unemployed (those jobless for 27 weeks or more) was little changed at 1.4 million over the month; these individuals accounted for 22.9 percent of the unemployed.

In September, the labor force participation rate remained at 62.7 percent, and the employment-population ratio, at 60.4 percent, was little changed.

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) increased by 263,000 to 4.6 million in September. These individuals, who would have preferred full-time employment, were working part time because their hours had been reduced or they were unable to find full-time jobs.

Establishment Survey Data

Total nonfarm payroll employment rose by 134,000 in September, compared with an average monthly gain of 201,000 over the prior 12 months. In September, job gains occurred in professional and business services, in health care, and in transportation and warehousing.

Employment in professional and business services increased by 54,000 in September and has risen by 560,000 over the year.

Health care employment rose by 26,000 in September. Hospitals added 12,000 jobs, and employment in ambulatory health care services continued to trend up (+10,000). Over the year, health care employment has increased by 302,000.

In September, employment in transportation and warehousing rose by 24,000. Job gains occurred in warehousing and storage (+8,000) and in couriers and messengers (+5,000). Over the year, employment in transportation and warehousing has increased by 174,000.

Construction employment continued to trend up in September (+23,000). The industry has added 315,000 jobs over the past 12 months.

Employment in manufacturing continued to trend up in September (+18,000), reflecting a gain in durable goods industries. Over the year, manufacturing has added 278,000 jobs, with about four-fifths of the gain in the durable goods component.

Within mining, employment in support activities for mining rose by 6,000 over the month and by 53,000 over the year.

Employment in leisure and hospitality was little changed over the month (-17,000). Prior to September, employment in the industry had been on a modest upward trend. Some of the weakness in this industry in September may reflect the impact of Hurricane Florence.

Employment showed little or no change over the month in other major industries, including wholesale trade, retail trade, information, financial activities, and government.

The average workweek for all employees on private nonfarm payrolls remained unchanged at 34.5 hours in September. In manufacturing, the workweek edged down by 0.1 hour to 40.8 hours, and overtime edged down by 0.1 hour to 3.4 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls was unchanged at 33.7 hours.

In September, average hourly earnings for all employees on private nonfarm payrolls rose by 8 cents to $27.24. Over the year, average hourly earnings have increased by 73 cents, or 2.8 percent. Average hourly earnings of private-sector production and nonsupervisory employees increased by 6 cents to $22.81 in September.

The change in total nonfarm payroll employment for July was revised up from +147,000 to +165,000, and the change for August was revised up from +201,000 to +270,000. With these revisions, employment gains in July and August combined were 87,000 more than previously reported. … After revisions, job gains have averaged 190,000 per month over the last 3 months.

There’s very little not to like in this report — at least after seasonal adjustments:

  • The unemployment rate is the lowest since 1969.
  • Black unemployment is barely above its all-time record low earlier this year, and seems likely to stay at 6 percent or below for some time.
  • The Hispanic unemployment rate, at 4.5 percent, tied its all-time low two months ago.
  • Even the 134K in job gains is acceptable, given the huge revisions to July and August. Considering ADP’s 230K September private-sector jobs number reported Wednesday, it seems likely that the government’s September number will get revised upward in future months. Additionally, the Household Survey showed employment gains of 420K.
  • This month’s hourly wage gains continued a three-month upward trend. The 25-cent increase during the past quarter annualizes to a compound rate of 3.75 percent, which would be the best in a very long time. Let’s hope it continues.
  • Once again, a higher-than-average portion of job gains was in goods-producing jobs (46K out of 121K in the private sector).
  • The volatile full-time employment figure increased by 317K. Longer-term, it’s up by 2.218 million in the past 12 months.

If there’s cold water to throw, it would be, first, over the participation rates and the lukewarm labor force growth (150K in September, and 840K in the past 12 months) — and second, over how the seasonal conversions gave Team Trump a HUGE (YUGE) break this month.

How solid was the seasonally adjusted jobs number?

This won’t win me any popularity contests, but the underlying raw numbers were horrible, and should be a cause for restrained enthusiasm:

SeasonConversionsNSAandSA0918

In comparison to the past four years’ numbers, today’s 350K in raw overall job gains and 618K in private-sector job losses would have predicted seasonally adjusted job losses of 59K and 21K, respectively.

This is probably as good a time as any to note that the Reality Check above doesn’t take number of Monday-Friday business days into account, while the actual seasonal conversions at BLS do. last month had only 19. But so did 2017, while the three previous years had 21. That may mitigate the concerns raised a bit, but not by much.

So it remains the case that Trump got a huge break today, and we need to hope for future-month revisions to September that get the underlying reality above sea level. Again, given ADP’s Wednesday number, that seems pretty likely.

And of course the concerns over the Establishment Survey shouldn’t dampen the celebration of the 49-year low in the unemployment rate.

Share

No Comments

No comments yet.

RSS feed for comments on this post.

Sorry, the comment form is closed at this time.