October jobs report: probably the best report of the entire expansion
October jobs report: probably the best report of the entire expansion
HEADLINES:
- +250,000 jobs added
- U3 unemployment rate unchanged at 3.7%
- U6 underemployment rate declined -0.1% from 7.5% to 7.4%
Here are the headlines on wages and the broader measures of underemployment:
Wages and participation rates
- Not in Labor Force, but Want a Job Now: rose +72,000 from 5.237 million to 5.309 million
- Part time for economic reasons: fell -21,000 from 4.642 million to 4.621 million
- Employment/population ratio ages 25-54: rose +0.4% from 79.3% to 79.7%
- Average Hourly Earnings for Production and Nonsupervisory Personnel: rose $.07 from $22.82 to $22.89, up +3.2% 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.)
Trump specifically campaigned on bringing back manufacturing and mining jobs. Is he keeping this promise?
- Manufacturing jobs rose +32,000 for an average of +21,000/month in the past year 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 fell -200 for an average of -8/month vs. the last seven years of Obama’s presidency in which an average of -300 jobs were lost each month
August was revised upward by 16,000. September was revised downward by -16,000, for no net change.
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 positive.
- the average manufacturing workweek fell by -0.1 hours to 40.8 hours. This is one of the 10 components of the LEI.
- construction jobs rose by +30,000. YoY construction jobs are up +330,000.
- temporary jobs rose by +3300.
- the number of people unemployed for 5 weeks or less decreased by -8,000 from 2,065,000 to 2,057,000. The post-recession low was set five months ago at 2,034,000.
Other important coincident indicators help us paint a more complete picture of the present:
- Overtime was unchanged at 3.5 hours.
- Professional and business employment (generally higher-paying jobs) increased by +35,000 and is up +516,000 YoY.
- the index of aggregate hours worked for non-managerial workers rose by +0.2%.
- the index of aggregate payrolls for non-managerial workers rose by +0.5%.
Other news included:
- the alternate jobs number contained in the more volatile household survey increased by +600,000 jobs. This represents an increase of 2,748,000 jobs YoY vs. 2,516,000 in the establishment survey.
- Government jobs increased by +4,000.
- the overall employment to population ratio for all ages 16 and up increased +0.2% from 60.4% m/m to 60.6% and is +0.4% YoY.
- The labor force participation rate rose +0.2% from 62.7% to 62.9 and is up +0.2% YoY.
SUMMARY
This was probably the single best report of the entire expansion. The only flies in the ointment were a slight increase in people not in the labor force who want a job now, and a slight decline in the manufacturing workweek. The headline unemployment rate was unchanged at its expansion low.
Aside from that, virtually everything moved in the right direction, in many cases to expansion highs. For the first time, wages for ordinary workers grew over 3% a year. Participation increased across the spectrum. The headline job growth number was excellent, and the more volatile household survey trend was even better.
If this were a Presidential election year, this would be awesome news for the incumbent. Even in a midterm year, this certainly can’t hurt as a closing economic argument for the majority party. Regardless of one’s ideology, however, this was simply an excellent report.
Nah, Harvey gyrations will give up a nice chunk in November. 2.9% wage growth is the true tops.
Expect a major downward revision to witholding numbers in February when jobs data is benchmarked to tax data.
BLS says 250K jobs on a report where the birth-death estimate they make is +245K?
“The number of job cuts at U.S. companies employing at least 5,000 people rose to the highest in almost a decade over the summer, based on experimental data from the Bureau of Labor Statistics. The data aren’t considered official, the bureau said.”
https://www.bloomberg.com/news/articles/2018-11-03/job-cuts-at-big-u-s-companies-may-be-picking-up-data-suggest
The books are cooked.
Jack:
Welcome to Angry Bear. First comments always go to moderation to weed out spammers and advertising.
The number of people working part time voluntarily,
is also increasing as the job market stays strong.
FRED link?
https://fred.stlouisfed.org/graph/?g=lTmX
i agree with Bert; the YoY increase in wages was largely an artifact of last year’s hurricane related wage decrease, and 250K was largely a rebound from September, which was impacted by Florence…those who were not paid during that week were not counted as employed, even if they expected to return to work the next week.…so jobs in the leisure and hospitality sector went from zero to 40,000 as those who didnt work that week go back to work…
September was revised to increase of 134,000 jobs; average the two months and it’s meh…
I will give credit where credit was due. 2.9%(where I have the 2nd half of 2018 averaging) average on nonsup wages is a improvement over the mid-2015-17 average of 2.5%, but you need another .8 increase to just hit the late 90’s/00 average and over 1% to hit the oil inflated mid-00’s averages. Now think about that.
Does this expansion have anymore power to bring that by 2020? That 4 trillion of corporate debt resetting in 2019 with higher interest rates reminds me of mortgage loans in 2007. Bad bad bad juju. I smell a high yield bond collapse.
Thanks for the welcome run75441,
I’m actually a longtime reader from the Kash and PGL days who stopped commenting when the Teahadi trolls showed up after Obama was elected. Been lurking in the interim.
Like Dubya before him, Trump has a way of stirring people to action in opposition.
Happy Election Day!
Jack:
Both Dan and I keep an eye on the comments. We are not 100% free of silly remarks being made by some. I can not get into their minds and make a few adjustments. We try to be accommodating until it does not work anymore. Good to have you back.