Before you get lost in the data I want to begin with a conclusion. This report is better than the last four months but still not indicative of the growth we need. It is better only by comparison. Rundown below and rate reaction here.
This is my monthly look inside the BLS Employment Situation Report. Keep in mind that there are two BLS Surveys: the Establishment and the Household. The Establishment surveys about 141,000 businesses and government agencies, representing approximately 486,000 individual worksites. It is taken each month during the week which includes the 12th of the month. The Household Survey is a survey of households taken each month during the week which included the 12th of the month. It is a survey of 60,000 households.
What is almost never said is that the number of people moving in and out of the labor force each month is almost 100 times the size of the net change in jobs. Rather than pose answers what I try to do each month is look at the numbers.
Each item below is suffixed with (H) if it is from the Household Survey and (E) if it is from the Establishment Survey and (B) if it combines the two.
– Headline Nonfarm jobs was +114,000. (E). The two previous months were revised to +142,000 (August) and +181,000 (July). Those revisions plus the 114,000 mean that there are 200,000 more non-farm jobs than we though there were in the last report.
– the Unemployment Rate was 7.8% down from 8.1% in August 2012 (B)
– Average hourly earnings was $23.58 up from $23.51 in August 2012 (E)
– Average work week was 34.5 hours up from 34.4 hours in August 2012 (E)
– Private jobs were +104,000. Government jobs were +10,000 (E)
Reading beneath the surface:
-Good producing jobs were -10,000. The two previous months were -22,000 and +20,000. (E)
-The size of the civilian labor rose from 154,645,000 to 155,063,000 an increase of 418,000. (H)
-The labor participation rate (percent of adult non-institutionalized population who are part of the labor force) was 63.6% up from 63.5% in August. It was 64.1% a year ago. (H) This, not the unemployment rate, is the number which should get everyone’s attention.
– the size of the civilian noninstitutional population increased by 206,000 in September to 243,772,000 (H). With a labor participation rate of 63.6% 131,000 more jobs were necessary to keep pace with population growth. We had 17,000 fewer jobs added than that. (H) The Employment/Population ratio was 58.7% and increase of 0.4 in the past month and the labor participation rate has dropped in the last year from 64.1% to 63.6%. All of the gain in jobs in the last year is attributable to population growth.
According to the 4 week moving average of Initial Jobless Claims, 1,500,000 people lost their jobs in the last 4 weeks. That normalizes to 1,625,000 lost jobs in a calendar month (there are about 13 4-week periods in a 12 month year.) This is up from the previous month’s 1,604,000 lost jobs/month.
Folks always scratch their head and ask “If 1,625,000 people filed unemployment claims last month how did we gain 114,000 jobs?” The answer is that the labor market is extremely dynamic. The number of people moving in an out of it each month is almost 100 times as large as the net change in jobs. Each month we try to look here at the dynamics of this market.
In September 2012 BLS measured 4 sets of people entering or leaving the jobs market:
– Job losers and persons who completed temporary jobs was 6,535,000 down 468,000 from August’s Job Losers and up down 1,493,000 from September 2011. (H)
– Job leavers was 957,000. This includes anyone who retired or voluntarily left working. This was up 15,000 from previous month and down 15,000 from September 2011. (H)
-Reentrants was 3,306,000. Reentrants are previously employed people who were looking for a job and found one. This was -12,000 from previous month and -301,000 from September 2011.(H)
-New entrants were 1,247,000. These are unemployed persons who never worked before and who are entering the labor force for the first time. This was -30,000 from previous month and -66,000 from September 2011.
The presentation of the total change in jobs is like looking at the final score of a game. The details tell the story:
– 114,000 more people are working
– 418,000 more people are in the civilian labor force
– 468,000 fewer people lost their jobs
– 15,000 more people left their jobs
– 30,000 fewer reentrants obtained jobs.
This month’s reports may sound confusing on the surface. More people are working, the Civilian labor force was down up 418,000 and the unemployment rate went down. The unemployment rate is the number of people from the Household Survey who say they are unemployed (12,088,000) divided by the Civilian Labor Force (155,063,000) or 7.795% which was rounded down to 7.8%. Last month’s unemployment rate was 8.111% which was rounded to 8.1%.
This report is strange. The number of jobs added last month was less that what is needed to keep pace with population growth. The unemployment rate fell because the household survey said that 873,000 more people were working and 456,000 fewer people were unemployed. There was a large increase of 582,000 in part time workers. 86,000 more jobs were added from the previous two months.
Differences between the establishment and household reports are notable this month. The good news is that we had a lot more part-time workers and these folks can become full-time. The bad news is that we had 17,000 fewer jobs than needed to keep pace with population growth. However the 86,000 added for the two prior month just more than make up for the 17,00 deficit this month, the 38,600 previously reported deficit last month.
The frustration is that we have two reports each month taken from two sets of data. The Establishment survey comes from employers and the Household Survey comes from interviews with people. The Household Survey this time is better. The establishment report is that of a jobs economy marching is place and not quite keeping pace with population growth.
For me the real frustration is that the media distills a complex picture into two numbers: jobs added and unemployment rate. If you have read this far you know that the employment market is a good bit more complex.
– Rate Reaction To September Jobs Report (CHARTS)
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