Friday, October 3, 2014

September jobs report: Now that's better! (but still not good enough)

- by New Deal democrat


  • 248,000 jobs added to the economy
  • U3 unemployment rate declined from 6.1% to 5.9%
Wages and participation rates
  • Not in Labor Force, but Want a Job Now: up 45,000 from 6.304 million to 6,349 million
  • Employment/population ratio ages 25-54: down -0.1% from 76.8% to 76.7%
  • Average Weekly Earnings for Production and Nonsupervisory Personnel: minus -$.01 from  $20.68 to $20.67, up 2.-% YoY
July was revised upward by 31,000 to 243,000.  August was revised upward by 38,000 to 180,000. The net revision was thus 69,000.  This means the "speed bump" that jobs hit last month has been almost renirely revised away. 

Since the economic expansion is well established, in recent months my focus has shifted to wages and the chronic heightened unemployment.  The headline numbers for August show a little progress on wages, and mixed results on participation.

Those who want a job now, but weren't even counted in the workforce were 4.3 million at the height of the tech boom, and were at 7.0 million a couple of years ago.  They have actually risen for the first eight months of this year. As noted above they are presently 6.349 million.  This is almost certainly due to the cutoff in extended unemployment benefits by Congress at the end of last year.

On the other hand, the participation rate in the prime working age group has made up 40% of its loss from its pre-recession high.

After inflation, real hourly wages for nonsupervisory employees probably were close to unchanged from August to September. The YoY change in average hourly earnings is +2.-%, somewhat better than the inflation rate.

The more leading numbers in the report tell us about where the economy is likely to be a few months from now. These were flat to slightly positive

  • the average manufacturing workweek rose by +0.1 hours to 40.9.  This is one of the 10 components of the LEI, and will have a positive impact.

  • construction jobs increased by 16,000. YoY construction jobs are up 230,000.  

  • manufacturing jobs  were up 4,000, and are up 161,000 YoY.

  • temporary jobs - a leading indicator for jobs overall - increased by 19,700.

  • the number of people unemployed for 5 weeks or less - a better leading indicator than initial jobless claims - decreased by 226,000 from 2,609,000 to 2,383,000, compared with December's 2,255,000 low.

Other important coincident indicators help us paint a more complete picture of the present:

  • Overtime hours were up from 3.4 hours to 3.5 hours.

  • the index of aggregate hours worked in the economy  fell by -0.1% from 109.2. to 109.1

  • The broad U-6 unemployment rate, that includes discouraged workers decreased from 12.0% to 11.8%.

  • Part time jobs for economic reasons decreased by 100,000 to a total of 7.103 million.
Other news included:
  • the alternate jobs number contained in the more volatile household survey increased by  232,000 jobs.  The household survey jobs numbers had been lagging the establishment survey numbers, but as expected this difference has now been almost entirely made up, with the household survey showing a 2,330,000 increase in jobs YoY vs. 2,645,000 in the establishment survey. 

  • Government jobs increased by 12,000.
  • the overall employment to population ratio for all ages 16 and above was unchanged at 59.0%, and has risen by +0.4% YoY. The labor force participation rate declined slightly from 62.8% to 62.7, and has fallen by -0.5% YoY (but remember, this includes droves of retiring Boomers).
.This wass a good report, which also almost completely revised away last month's subpar report.  The economy is still adding over 200,000 jobs a month.  The unemployment rate declined due to a big increase in jobs, with only a small (-97,000) decline in the civilian labor force.  At 5.9%, it is finally back in what used to be considered a nomral, non-recessionary range.

The internals to the report were only mildly positive.  Involuntary part time jobs did decrease, although those who have stopped looking but want a job now increased.

The bottom line is, we continue to make slow, grinding progress towards normalcy.  Wages are still a big disappointment.  This was a very good post-Great Recession report. It would be a mediocre report for virtually any othere economic expansion since World War 2.