Friday, November 03, 2017

Comment on Employment Report: Hurricane Bounce Back, Record Job Streak Still Alive!

by Bill McBride on 11/03/2017 09:55:00 AM

The headline jobs number was strong at 261 thousand  - due to a bounce back from the hurricanes - but below expectations. However a key reason for the "disappointing" headline number was that the previous two months were revised up by a combined 90 thousand jobs.

The upward revision to the September jobs report keeps the record job streak alive at 85 consecutive months (92 months if we remove the decennial Census hiring and firing). This was a strong possibility that I discussed last month, see: The Record Job Streak: A couple of Comments

Earlier: October Employment Report: 261,000 Jobs Added, 4.1% Unemployment Rate

In October, the year-over-year change was 2.004 million jobs. This is still trending down (excluding the hurricane related drop last month).

Average Hourly Earnings

Wages CES, Nominal and RealClick on graph for larger image.

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 at 2.4% YoY in October.

Wage growth has generally been trending up, and wages in October were probably impacted by low wage jobs returning following the hurricanes.

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) declined by 369,000 to 4.8 million in October. 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 full-time jobs. Over the past 12 months, the number of involuntary part-time workers has decreased by 1.1 million.
The number of persons working part time for economic reasons decreased in October.  This is the lowest level since December 2007. The number working part time for economic reasons suggests a little slack still in the labor market.

These workers are included in the alternate measure of labor underutilization (U-6) that declined to 7.9% in October.  This is the lowest level for U-6 since December 2006, and matches the low of the previous cycle.

Unemployed over 26 Weeks

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

According to the BLS, there are 1.621 million workers who have been unemployed for more than 26 weeks and still want a job. This was down from 1.73 million in September.

This is trending down, but still a little elevated.

The headline jobs number was solid (including revisions), the unemployment rate down, and U-6 the lowest since 2006 - all positive signs.  Wage growth was disappointing, but that might be hurricane related.