Employment Report

By Spencer,

The unemployment rate jumped to 10.2%. Except for the peak rate of 10.8% after the 1982 recession this is the highest in the post WW II era.

The overall tenor of the report was very similar to the past three months reports and sent the message that the economy is no longer collapsing as it was earlier this year, but it is still in a recession. The encouraging news in the report was that temporary employment improved and that manufacturing hours worked and averge work week improved. This implies that the recession may be over in the manufacturing sector, but not in the service sector.

Because service employment is about 112.5 million versus 11.7 million in manufacturing the improvement in manufacturing was swamped by the continued fall in services. Consequently, aggregate hours worked fell 0.2%. This is similar to the numbers in yesterday’s productivity report and implies that fourth quarter productivity will also be strong with all that implies for
weak employment.

Average hourly earnings did improve, as both average hourly earnings and average weekly earnings rose by 0.3%. But with oil up about $10 last month this is unlikely to generate an improvement in real wages or income. On the encouraging side, maybe the past years actual decline in nominal personal income growth may be ending.