Friday, November 06, 2015

Comments: Strong October Employment Report, Seasonal Retail Hiring at Record Level

by Bill McBride on 11/06/2015 09:55:00 AM

This was a strong employment report with 271,000 jobs added, and employment gains for August and September combined were revised up slightly.

Also wages increased, from the BLS: "In October, average hourly earnings for all employees on private nonfarm payrolls rose by 9 cents to $25.20, following little change in September (+1 cent). Hourly earnings have risen by 2.5 percent over the year."

Earlier: October Employment Report: 271,000 Jobs, 5.0% Unemployment Rate

A few more numbers:  Total employment is now 4.3 million above the previous peak.  Total employment is up 13.0 million from the employment recession low.

Private payroll employment increased 268,000 from August to September, and private employment is now 4.7 million above the previous peak. Private employment is up 13.5 million from the recession low.

In October, the year-over-year change was 2.81 million jobs.

Seasonal Retail Hiring

According to the BLS employment report, retailers hired seasonal workers in October at the highest level since 1999.

Seasonal Retail HiringClick on graph for larger image.

Typically retail companies start hiring for the holiday season in October, and really increase hiring in November. Here is a graph that shows the historical net retail jobs added for October, November and December by year.

This graph really shows the collapse in retail hiring in 2008. Since then seasonal hiring has increased back close to more normal levels. Note: I expect the long term trend will be down with more and more internet holiday shopping.

Retailers hired 214.5 thousand workers (NSA) net in October. This is the all time record.  Note: this is NSA (Not Seasonally Adjusted).

This suggests retailers are optimistic about the holiday season.  Note: There is a decent correlation between October seasonal retail hiring and holiday retail sales.

Employment-Population Ratio, 25 to 54 years old

Employment Population Ratio, 25 to 54Since 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 increased in October to 80.7%, 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

Wages CES, Nominal and RealThis 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 2.5% YoY - and although the series is noisy - it does appear wage growth is trending up.

Note: CPI has been running under 2%, so there has been some real wage growth.

Part Time for Economic Reasons

Part Time WorkersFrom the BLS report:

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) edged down by 269,000 to 5.8 million in October. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job. Over the past 12 months, the number of persons employed part time for economic reasons has declined by 1.2 million.
The number of persons working part time for economic reasons decreased in October to 5.77 million from 6.04 million from in September.  This is the lowest level since June 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 9.8% in October (lowest level since May 2008).

Unemployed over 26 Weeks

Unemployed Over 26 Weeks This graph shows the number of workers unemployed for 27 weeks or more.

According to the BLS, there are 2.14 million workers who have been unemployed for more than 26 weeks and still want a job. This was up slightly from 2.10 million in September.

This is generally trending down, but is still high.

State and Local Government

State and Local GovernmentThis graph shows total state and government payroll employment since January 2007. (Note: Scale doesn't start at zero to better show the change.)

In October 2015, state and local governments added 5 thousand jobs. State and local government employment is now up 212,000 from the bottom, but still 546,000 below the peak.

State and local employment is now increasing.  And Federal government layoffs appear to have ended and, with the budget deal, Federal employment will probably increase in 2016. (Federal payrolls decreased by 2,000 in October, and Federal employment is up 1,000 year-to-date).

Overall this was a strong employment report for October.