by Bill McBride on 10/02/2015 12:49:00 PM
Friday, October 02, 2015
This was a disappointing employment report with 142,000 jobs added, and employment gains for July and August were revised down.
Also wages declined slightly, from the BLS: "In September, average hourly earnings for all employees on private nonfarm payrolls, at $25.09, changed little (-1 cent), following a 9-cent gain in August. Hourly earnings have risen by 2.2 percent over the year."
There is always some variability in the month-to-month employment reports, and my general reaction is R-E-L-A-X. Jobs gains are still solid year-over-year, and I expected some slowdown in job gains this year - also recent gains are still large enough to push down the unemployment rate.
Earlier: September Employment Report: 142,000 Jobs, 5.1% Unemployment Rate
A few more numbers: Total employment is now 4.0 million above the previous peak. Total employment is up 12.7 million from the employment recession low.
Private payroll employment increased 118,000 from August to September, and private employment is now 4.4 million above the previous peak. Private employment is up 13.2 million from the recession low.
In September, the year-over-year change was 2.75 million jobs.
Employment-Population Ratio, 25 to 54 years old
Since the overall participation rate declined recently due to cyclical (recession) and demographic (aging population, younger people staying in school) reasons, here is the employment-population ratio for the key working age group: 25 to 54 years old.
In the earlier period the participation rate for this group was trending up as women joined the labor force. Since the early '90s, the participation rate moved more sideways, with a downward drift starting around '00 - and with ups and downs related to the business cycle.
The 25 to 54 participation rate declined in September to 80.6%, and the 25 to 54 employment population ratio was unchanged at 77.2%. The participation rate for this group might increase a little more (or at least stabilize for a couple of years) - although the participation rate has been trending down for this group since the late '90s.
Average Hourly Earnings
This graph is based on “Average Hourly Earnings” from the Current Employment Statistics (CES) (aka "Establishment") monthly employment report. Note: There are also two quarterly sources for earnings data: 1) “Hourly Compensation,” from the BLS’s Productivity and Costs; and 2) the Employment Cost Index which includes wage/salary and benefit compensation.
The graph shows the nominal year-over-year change in "Average Hourly Earnings" for all private employees. Nominal wage growth was unchanged at 2.2% YoY - and although the series is noisy - it does appear wage growth is trending up a little. Wages will probably pick up a little more this year.
Note: CPI has been running under 2%, so there has been some real wage growth.
Part Time for Economic Reasons
From the BLS report:
The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) declined by 447,000 to 6.0 million in September. These individuals, who would have preferred full-time employment, were working part time because their hours had been cut back or because they were unable to find a full-time job.The number of persons working part time for economic reasons decreased in September to 6.04 million from 6.48 million from in August. This is the lowest level since August 2008, however the level suggests slack still in the labor market.
These workers are included in the alternate measure of labor underutilization (U-6) that declined to 10.0% in September (lowest level since May 2008).
Unemployed over 26 Weeks
This graph shows the number of workers unemployed for 27 weeks or more.
According to the BLS, there are 2.10 million workers who have been unemployed for more than 26 weeks and still want a job. This was down from 2.19 million in August and is the lowest level since September 2008.
This is generally trending down, but is still high.
State and Local Government
This graph shows total state and government payroll employment since January 2007. (Note: Scale doesn't start at zero to better show the change.)
In September 2015, state and local governments added 26 thousand jobs. State and local government employment is now up 252,000 from the bottom, but still 506,000 below the peak.
State and local employment is now increasing. And Federal government layoffs appear to have ended (Federal payrolls decreased in September, and Federal employment is up 9,000 year-to-date).
Overall this was a disappointing employment report for September.