by Bill McBride on 10/07/2005 10:06:00 AM
Friday, October 07, 2005
The jobs report can be summarized: Construction hot, manufacturing not, Katrina impact unclear. As is usual, construction added jobs while the downward trend in manufacturing continued. In fact, manufacturing jobs (14.234 million) are at the lowest level since 1950.
UPDATE: Please see Dr. Altig's comments too. He points out that I was "incomplete" and writes that "outside of retail sales" and manufacturing "advances in employment were broad-based." See his graphs.
From the BLS:
Nonfarm payroll employment was little changed (-35,000) in September, and the unemployment rate rose to 5.1 percent ... The measures of employment and unemployment reported in this news release reflect both the impact of Hurricane Katrina, which struck the Gulf Coast in late August, and ongoing labor market trends.Did this report, with "negligible" impact from Katrina, accurately measure the employment impact of Katrina? The BLS is not sure:
For the September CES estimates, several modifications to the usual estimation procedures were adopted to better reflect employment in Katrina-affected areas. The changes included: a) modification of procedures to impute employment counts for survey nonrespondents in the most heavily impacted areas b) adjustments to sample weights for sample units in the more broadly defined disaster area to compensate for lower-than-average survey response rates, and c) modification of the adjustment procedure for the business net birth/death estimator to reflect likely changes in business birth/death patterns in the disaster areas.It will probably takes several months to accurate assess the impact of Katrina on jobs. Meanwhile, the relatively strong report (-150K jobs was the expectation) has led to a sell off in bonds with the 10 year yield above 4.4% (but bonds are rallying as I type).
Hurricane Rita made landfall during the September data collection period. As a result, response rates for both surveys were lower than normal in some areas. However, because the reference periods for both surveys occurred before Hurricane Rita struck, the impact of this storm on measures of employment and unemployment was negligible.
On overall employment: Bush's first term, with a net loss of 759K private sector jobs (a gain of 119K total jobs), was a disappointment. For Bush's 2nd term, anything less than 6.8 Million net jobs will have to be considered poor. And anything above 10 million net jobs as excellent. Of course, in additional to the number of jobs, the quality of the jobs and real wage increases are also important measures.
Click on graph for larger image.
For the quantity of jobs, this graph provides a measurement tool for job growth during Bush's 2nd term.
The blue line is for 10 million jobs created during Bush's 2nd term; the purple line for 6.8 million jobs. The insert shows net job creation for the first 8 months of the 2nd term - currently midway between the two lines.