Friday, October 02, 2020

Comments on September Employment Report

by Calculated Risk on 10/02/2020 10:58:00 AM

The September employment report was below expectations, although employment for the previous two months were revised up.

Leisure and hospitality added another 318 thousand jobs in September, following 4.16 million jobs added in May through August. Leisure and hospitality lost 8.3 million jobs in March and April, so about 54% of those jobs were added back in the May through September period.

Earlier: September Employment Report: 661 Thousand Jobs Added, 7.9% Unemployment Rate

In August, the year-over-year employment change was minus 9.65 million jobs.

Permanent Job Losers

Year-over-year change employmentClick on graph for larger image.

This graph shows permanent job losers as a percent of the pre-recession peak in employment through the September report. (ht Joe Weisenthal at Bloomberg)

This data is only available back to 1994, so there is only data for three recessions.

In September, the number of permanent job losers increased to 3.756 million from 3.411 million in August.

Prime (25 to 54 Years Old) Participation

Employment Population Ratio, 25 to 54Since the overall participation rate has declined 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.

The prime working age will be key in the eventual recovery.

The 25 to 54 participation rate decreased in September to 80.9% from 81.4% in August, and the 25 to 54 employment population ratio decreased to 75.0% from 75.3%.

Part Time for Economic Reasons

Part Time WorkersFrom the BLS report:

"In September, the number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) declined by 1.3 million to 6.3 million, reflecting a decrease in the number of persons whose hours were cut due to slack work or business conditions."
The number of persons working part time for economic reasons decreased in September to 6.300 million from 7.572 million in August.

These workers are included in the alternate measure of labor underutilization (U-6) that decreased to 12.8% in September. This is down from the record high in April 22.8% for this measure since 1994.

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 2.405 million workers who have been unemployed for more than 26 weeks and still want a job.

This will increase sharply in October - since the largest number of layoffs were in April - and will be a key measure to follow during the recovery.

Summary:

The headline monthly jobs number was below expectations, however the previous two months were revised up 145,000 combined.  The headline unemployment rate decreased to 7.9%, however this was somewhat due to the wrong reasons (decline in participation).

The rise in permanent job losers, and the decline in prime participation and in the prime employment population ratio are concerning.   Although there was some improvement, overall this was a disappointing job report.