October jobs report paints a portrait of a full (or nearly full) employment economy
October jobs report paints a portrait of a full (or nearly full) employment economy
- +128,000 jobs added (+148,000 ex-Census)
- U3 unemployment rate up +0.1% from 3.5% to 3.6%
- U6 underemployment rate up +0.1% from 6.9% to 7.0%
Leading employment indicators of a slowdown or recession
I am highlighting these because many leading indicators overall strongly suggest that an employment slowdown is coming. The following more leading numbers in the report tell us about where the economy is likely to be a few months from now. These were mixed:
- the average manufacturing workweek fell -0.2 from 40.5 hours to 40.3 hours. This is one of the 10 components of the LEI and is negative.
- Manufacturing jobs declined by -36,000 (but would have risen by +6,000 were it not for the GM strike). YoY manufacturing is up 49,000, a sharp deceleration from 2018’s pace.
- construction jobs rose by +10,000. YoY construction jobs are up +148,000, also a deceleration from summer 2018. Residential construction jobs, which are even more leading, rose by +2,900.
- temporary jobs declined by -8,100. September’s strong number, however, was revised even higher to +20,100.
- the number of people unemployed for 5 weeks or less rose by -100,000 from 1,868,000 to 1.968,000.
Wages and participation rates
Here are the headlines on wages and the broader measures of underemployment:
- Not in Labor Force, but Want a Job Now: declined by -127,000 from 4.880 million to 4.753 million
- Part time for economic reasons: rose by 88,000 from 4.350 million to 4.438 million
- Employment/population ratio ages 25-54: rose +0.2% from 80.1% to 80.3% (NEW EXPANSION HIGH).
- Average Hourly Earnings for Production and Nonsupervisory Personnel: rose $.04 to $23.70, up +3.5% 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 rose an average of +4000/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 -100, an average of -67 jobs/month in the past year 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 51,000. September was also revised upward by 44,000, for a net change of +95,000.
Other important coincident indicators help us paint a more complete picture of the present:
- Overtime remained at 3.2 hours
- Professional and business employment (generally higher-paying jobs) rose by 22,000 and is up +402,000 YoY.
- the index of aggregate hours worked for non-managerial workers rose by 0.1%
- the index of aggregate payrolls for non-managerial workers rose by 0.3%
Other news included:
- the alternate jobs number contained in the more volatile household survey rose by 241,000 jobs. This represents an increase of 1,928,000 jobs YoY vs. 2,093,000 in the establishment survey.
- Government jobs declined by -3,000 (+17,000 ex-census).
- the overall employment to population ratio for all ages 16 and up was unchanged at 61.0% m/m and is up 0.4% YoY.
- The labor force participation rate rose +0.1% from 63.2% to 63.3% and is up 0.4% YoY.
SUMMARY
This was a very good report with few negatives, which were chiefly in manufacturing.
In particular, it is looking even clearer that we may be at practical “full employment.” The prime age employment population ratio has matched its high point of the 1980s and 2000s expansion, and was only higher for 15 months in 1999-2000. Those not in the labor force but who want a job now are also at a 25 year low as a share of the labor force. Meanwhile, nonsupervisory wages remained at an expansion high YoY at +3.5% (except for one month, and still below peak YoY changes in the past 3 expansions).
The negatives were the slight tick upward in the unemployment and underemployment rates (and the GM strike was not big enough to account for those). The manufacturing workweek declined further, a bigger warning for job losses to come. Temporary jobs, including revisions were flat, so they are above July’s trough but below last autumn’s peak.
Reasonably speaking, with revisions, this report paints a portrait of a full or nearly full employment economy with a few soft spots, and wages that still ought to be making more progress.
“+128,000 jobs added (+148,000 ex-Census)”.
SAY WHAT? Trump told us that employment rose by 303,000. I guess the BLS has been taken over by never Trumper and socialist Democrats!
Just for reference, 400000 jobs are so jobs have been created with census, many other government employees moving over while temps replace them.
Bert – it is amazing how you NEVER provide a source. Oh wait – you are lying about this 400 thousand figure and providing a source would show that:
https://www.bls.gov/ces/tables/census-temporary-intermittent-workers-government-employment.htm
The figure for September 2019 was only 28 thousand. For October 2019 it had decline to only 9 thousand. Come on Bert – stop this pointless lying. And learn to cite BLS data. DAMN!
I am using the “Household” or CES side of it. Your using NFP, which is heavily revised and not the same data. There will be 900000 hires(there abouts) in total by April 2020. WE are probably nearing the halfway point(Thanksgiving). I use this as reference because LFPR and ER are both boosted by this hiring.
As a BEA contact of mine said: The economy peaked in March/April. Without tariff driven debt expansion with credit card debt(seen by surging defaults in October) the economy probably be showing even more weakness(plus yry oil prices action means no more income growth from that source at least until asset prices crash) then it has already. We are heading for a mini wildy e coyote moment imo with asset prices. They are overvalued based on debt expansion and 20% reduction in real corporate profits since the middle of 2015 is hurting investment……….fugly. Their price action is purely guessing and they are guessing wrong.
My BEA contact suspects:
1.1% growth in the 4th quarter. Might be 0% depending how fast the consumer downturn happens.
2. Investment stops growing by January 1st. Starts contracting January 2nd, putting further downward pressure on asset prices
3.See’s no resolution to the “trade war”.
4.See’s no resolution to “Brexit” anytime soon.
I worked the 99-00 census in Ohio, so don’t give me lip. This is a very dangerous time for the expansion as I have been predicting for over a year now. Yes, Trump’s tariffs have created a mess begin of its demand pull feature. When that string runs out, there is nothing but the cliff. Without the trade war, Dan Crawford would already be panicking. Nice being back on a desktop. I can “educate” the fools on here.
You are doing what Bert? No link? Why do none of us believe you?
Full employment is a puff term
The word ” practical” as qualifier
Gives away the intent
Stop the expansion
We need a job class macro that
Goes for the limits
The orignal goal in the heroic macro mid 40’s
for employment was maximum
Not full
Corporate interests quickly moved conventional discourse to
Full employment
Time to return to maximum
Now the Nairu paradigm is crumbling
Hi Paine:
You are correct in stating full employment as 3.7% unemployed is certainly a misnomer. It makes for a nice slack of able bodies for those who go on strike to replace them. I believe the issue is the numbers of baby boomers hanging on to employment and not retiring. Kind of muddies the waters a bit as they are a significant number. When they are out of the PR then I am assuming PR will increase to what it should be and was 2001.
Yes
The bi partisan macro paradigm
That guided both party “technicians ”
From the mid 80’s
Till the snail recovery of Obama
Is today in ruins as the snail pulls UE deep into
The mythical NAIRU zone
Without wage acceleration
We need a new job class rooted macro
Paine:
Most certainly Obama was running against the wind of Republican resistance to anything a newly elected president could do and burdened with deficits from a previous administration and a blind obedience to a Republican vow to resist anything he did.
When you mention boomers “hanging on to employment and not retiring” you also need to think about the 50-60 somethings who have been effectively locked out of the job market for years after earlier downsizings. Age discrimination is not only real in this job market it is now algorithmic; I believe there was a recent story about how Facebook would guarantee your help wanted ad would not be seen by users over a certain age.
My husband is 58 and holds a Phd. in chemistry from TX A&M. Despite 5+ years of looking for full time employment as a chemist he has managed to get exactly 1 job interview in the last 3 years. He cannot get interviewed for jobs he is way overqualified for because there are hundreds of younger applicants. And like many other technical domains most of the work is being done in India/China/Russia.
I am also thinking of the thousands of former colleagues downsized from my employer a fortune 500 tech firm. Most of whom were in their 40s-50s and many of whom have struggled to find new positions. There is a class action lawsuit moving forward with a claim of age discrimination and I hope the plaintiffs win it. There have been some truly shocking things that came out of discovery; apparently the organization decided to fire a lot of older workers because they wanted to cultivate a younger more dynamic hipper image. We lost a lot of skills over the last decade because people didn’t have the right haircuts and clothing brands. okay then.