September jobs report: establishment survey stinks, but household survey rocks!

September jobs report: establishment survey stinks, but household survey rocks!

  • -33,000 jobs lost
  • U3 unemployment rate down -0.2% from 4.4% to 4.2% (new low)
  • U6 underemployment rate down -0.3% from 8.6% to 8.3% (new low)
Here are the headlines on wages and the chronic heightened underemployment:
Wages and participation rates
  • Not in Labor Force, but Want a Job Now:  down -216,000 from 5.844 million to 5.628 million
  • Part time for economic reasons: down -133,000 from 5.255 million to 5.122 million (new low)
  • Employment/population ratio ages 25-54: up +0.5% from 78.4% to 78.9% (new high) 
  • Average Weekly Earnings for Production and Nonsupervisory Personnel: up $.0.09 from $22.14,  to $22.23, up +2.5% YoY.  (Note: you may be reading different information about wages elsewhere. They are citing average wages for all private workers. I use wages for nonsupervisory personnel, to come closer to the situation for ordinary workers.)
Holding Trump accountable on manufacturing and mining jobs
 Trump specifically campaigned on bringing back manufacturing and mining jobs.  Is he keeping this promise? 
  • Manufacturing jobs fell by -1,000 for an average of  +9,800 a month vs. the last seven years of Obama’s presidency in which an average of 10,300 manufacturing jobs were added each month.
  • Coal mining jobs rose by 500 for an average of +133 a month vs. the last seven years of Obama’s presidency in which an average of -300 jobs were lost each month

July was revised downward by -51,000. August was revised upward by +13,000, for a net change of -38,000.

The more leading numbers in the report tell us about where the economy is likely to be a few months from now. These were mainly flat.
  • the average manufacturing workweek was unchanged at 40.7 hours.  This is one of the 10 components of the LEI.
  • construction jobs increased by +8,000. YoY construction jobs are up 184,000.
    • temporary jobs increased by +5,900.

  • the number of people unemployed for 5 weeks or less increased by +4,000 from 2,222,000 to 2,226,000.  The post-recession low was set al,ost two years ago at 2,095,000.
Other important coincident indicators help  us paint a more complete picture of the present:
    • Overtime was flat at 3.3 hours.
    • Professional and business employment (generally higher- paying jobs) increased by +13,000 and  is up +528,000 YoY.

  • the index of aggregate hours worked in the economy fell  by  -0.1 from 107.4 to 107.3
  •  the index of aggregate payrolls rose  by +0.5 from 134.7 to 135.2.
Other news included:
  • the  alternate jobs number contained  in the more volatile household survey increased by  906,000 (!)   jobs.  This represents an increase of 2,419,000  jobs YoY vs. 1,777,000 in the establishment survey.
  • Government jobs rose by +7,000 .
  • the overall  employment to  population ratio for all ages 16 and up rose +0.3% from 60.1% to  60.4  m/m  and is  up +0.6%  YoY.
  • The  labor force participation  rate rose +0.2% m/m and is up +0.2% YoY from 62.9% to 63.1%.

 This report was certainly affected by Hurricanes Harvey and Irma, but what is surprising is all of the areas of strength, especially in the household report.

Both the U3 and U6 unemployment and underemployment rates fell to new lows for this expansion. Involuntary part-time employment also fell to a new low. Prime age labor force participation rose to a new high.
Even in the establishment survey, but for the huge decline in  leisure and hospitalityworkers, the headline number would have been +78,000. And the l eading category of temporary jobs increased.
The only cautions to my surprisingly upbeat take on this report are that net revisions to July and August were lower, which has become increasingly common this year; and the household survey, which included a gain of over 900,000 jobs ( ! ) was likely something of an outlier.
But despite the negative headline number of jobs, the totality of the two reports show an underlying strong labor market — with of course the dismal and chronic exception of lackluster wage growth.