September jobs report: a very positive report within a framework of continued deceleration
As I have written many, many times, consumption leads employment; and the near stagnation in real sales and spending signaled that we should expect weaker monthly employment reports, with both fewer new jobs and a higher unemployment rate. In September, the former happened; the latter did not.
The three month average in employment gains since February has continued to decelerate from over 500,000 to 372,000. But this month the unemployment rate declined back to its post-pandemic low.
Here’s my in depth synopsis.
- 263,000 jobs added. Private sector jobs increased 288,000. Government jobs decreased by -25,000.
- The alternate, and more volatile measure in the household report indicated a gain of 204,000 jobs. The above household number factors into the unemployment and underemployment rates below.
- U3 unemployment rate declined 0.2% to 3.5%.
- U6 underemployment rate declined 0.3% to 6.7%.
- Those not in the labor force at all, but who want a job now, increased 285,000 to 5.834 million, compared with 4.996 million in February 2020.
- Those on temporary layoff declined -24,000 to 758,000.
- Permanent job losers declined -173,000 to 1,181,000.
- July was revised upward by -105,000, and July was unchanged, for a net increase of 11,000 jobs compared with previous reports.
Leading employment indicators of a slowdown or recession
These are leading sectors for the economy overall, and will help us gauge whether the strong rebound from the pandemic will continue. These were all positive:
- the average manufacturing workweek, one of the 10 components of the Index of Leading Indicators, increased +0.1 hour to 41.1 hours.
- Manufacturing jobs increased 22,000, and are at a level higher than before the pandemic.
- Construction jobs increased 19,000, also at a level higher than before the pandemic.
- Residential construction jobs, which are even more leading, rose by 2,300.
- Temporary jobs rose by 27,200. Since the beginning of the pandemic, roughly 300,000 such jobs have been gained.
- the number of people unemployed for 5 weeks or less declined by -69,000 to 2,154,000, about equal to its pre-pandemic level.
Wages of non-managerial workers
- Average Hourly Earnings for Production and Nonsupervisory Personnel rose $0.10 to $27.77, which is a 5.8% YoY gain, a further decline of -0.3% from last month and its 6.7% peak at the beginning of this year.
Aggregate hours and wages:
- the index of aggregate hours worked for non-managerial workers increased 0.5% which is above its level just before the pandemic.
- the index of aggregate payrolls for non-managerial workers rose by 0.9%, a very strong increase compared with the last several months’ outright declines in prices.
Other significant data:
- Leisure and hospitality jobs, which were the most hard-hit during the pandemic, rose 83,000, but are still about -6.7% below their pre-pandemic peak.
- Within the leisure and hospitality sector, food and drink establishments added 60,700 jobs, but are still about 560,000, or -4.5% below their pre-pandemic peak.
- Professional and business employment increased by 46,000, over 1,000,000 above its pre-pandemic peak.
- Full time jobs increased 326,000 in the household report.
- Part time jobs declined -7,000 in the household report.
- The number of job holders who were part time for economic reasons declined -312,000 to 3,763,000.
- The Labor Force Participation Rate declined -0.1% to 62.3%, vs. 63.4% in February 2020.
This was a very good report with just a few blemishes. On the plus side, the entire slew of leading indicators in the report advanced. Total payroll gains were very strong. The unemployment and underemployment rates both declined. Part time employment was more than replaced by strong full time employment. The rebound in leisure and hospitality employment continued. Wage increases moderated YoY, but on a monthly basis advanced well.
The few weak points included the decline in the labor force participation rate, which is why the unemployment and underemployment rates declined as they did. The gains in professional and business employment were weak.
In summary, we have a very positive report, completely inconsistent with any idea that we are currently already in a recession, but within the larger framework of an economy which is decelerating.
“August jobs report: despite a good headline number, the decelerating trend resumes,” Angry Bear, angry bear blog.