Friday, November 06, 2020

Comments on October Employment Report

by Calculated Risk on 11/06/2020 09:23:00 AM

The October employment report was at expectations, and employment for the previous two months were revised up slightly.


Government employment declined 268 thousand in October.   The job losses at the Federal level were due to letting go temporary decennial workers, but 130 thousand jobs were lost at state and local governments.  These losses could increase sharply if there is no disaster relief for the states.  I'll have more on this.

Leisure and hospitality added another 271 thousand jobs in October, following 4.56 million jobs added in May through September. Leisure and hospitality lost 8.3 million jobs in March and April, so about 58% of those jobs were added back in the May through October period.

Earlier: October Employment Report: 638 Thousand Jobs Added, 6.9% Unemployment Rate

In October, the year-over-year employment change was minus 9.18 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 October report. (ht Joe Weisenthal at Bloomberg)

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

In October, the number of permanent job losers decreased to 3.684 million from 3.756 million in September.

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 increased in October 81.2% to from 80.9% in September, and the 25 to 54 employment population ratio increased to 76.0% from 75.0%.

Seasonal Retail Hiring

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.

Seasonal Retail HiringThis graph really shows the collapse in retail hiring in 2008. Since then seasonal hiring had 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 243 thousand workers (NSA) net in October.   Note: this is NSA (Not Seasonally Adjusted).

This might be distorted this year by a combination of seasonal hiring - and some bounce back in employment from the shutdowns earlier this year.

Part Time for Economic Reasons

Part Time WorkersFrom the BLS report:
"The number of persons employed part time for economic reasons increased by 383,000 to 6.7 million in October, after declines totaling 4.6 million over the prior 5 months. These individuals, who would have preferred full-time employment, were working part time because their hours had been reduced or they were unable to find full-time jobs."
The number of persons working part time for economic reasons increased in October to 6.684 million from 6.300 million in September.

These workers are included in the alternate measure of labor underutilization (U-6) that decreased to 12.1% in October. 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 3.556 million workers who have been unemployed for more than 26 weeks and still want a job.

This increased 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 at expectations, and the previous two months were revised up 15,000 combined.  The headline unemployment rate decreased to 6.9%.   However the number of part time workers increased, and the number of long term unemployed increased sharply.