For October the the BLS reports a gain of 531,000 jobs with 604,000 private. The Econoday consensus was 450,000 and 400,000 respectively.
BLS Jobs Statistics at a Glance
Details from the monthly BLS Employment Report.
- Nonfarm Payroll: +531,000 to 148,319,000 – Establishment Survey
- Employment: +359,000 to 154,039,000– Household Survey
- Unemployment: -255,000 to 7,419,000- Household Survey
- Baseline Unemployment Rate: -0.2 to 4.6% – Household Survey
- U-6 unemployment: -0.2 to 8.3% – Household Survey
- Civilian Non-institutional Population: +142,000 to 291,908,000
- Civilian Labor Force: +104,000 to 161,458,000 – Household Survey
- Not in Labor Force: +38,000 to 100,450,000 – Household Survey
- Participation Rate: +0.0 to 61.6% – Household Survey
Job Revisions
- The change in total nonfarm payroll employment for August was revised up by 117,000, from +366,000 to +483,000
- The change for September was revised up by 118,000, from +194,000 to +312,000.
- With these revisions, employment in August and September combined is 235,000 higher than previously reported.
Part-Time Jobs
- Involuntary Part-Time Work: -45,000 to 4,423,000
- Voluntary Part-Time Work: +216,000 to 20,605,000
- Total Full-Time Work: +279,000 to 128,027,000
- Total Part-Time Work: 199,000 to 25,906,000
The above numbers never total correctly. I list them as reported.
Unemployment Rate – Seasonally Adjusted
Nonfarm Payrolls
The above chart puts a needed perspective on the jobs recovery.
- Jobs are up 18,168,000 from the low in April 2020.
- Jobs are still 4,204,000 from the February 2020 pre-Covid high.
Those numbers do not reflect increasing population or the type of job recovered.
Hours and Wages
Average weekly hours of all private employees fell 0.1 hour to 34.7 hours. Average weekly hours of all private service-providing employees rose 0.1 hour to 33.7 hours. Average weekly hours of manufacturers fell 0.1 hour to 40.3 hours.
Average Hourly Earnings of All Nonfarm Workers rose $0.11 to $30.96
Year-over-year, wages rose from $29.52 to $30.96. That’s a gain of 4.88%.
The month-over-month and year-over-year gains are seriously distorted by Covid.
Average hourly earnings of Production and Supervisory Workers rose $0.10 to $26.26.
Year-over-year, wages rose from $24.83 to $26.26. That’s a gain of 5.76%.
Again, these numbers are seriously distorted by Covid.
For a discussion of income distribution, please see What’s “Really” Behind Gross Inequalities In Income Distribution?
Birth Death Model
Starting January 2014, I dropped the Birth/Death Model charts from this report.
For those who follow the numbers, I retain this caution: Do not subtract the reported Birth-Death number from the reported headline number. That approach is statistically invalid.
The model is wildly wrong at turning points but otherwise means little. It is also heavily revised and thus useless.
Alternative Measures of Unemployment
Table A-15 is where one can find a better approximation of what the unemployment rate really is.
The official unemployment rate is 4.6%. However, if you start counting all the people who want a job but gave up, all the people with part-time jobs that want a full-time job, all the people who dropped off the unemployment rolls because their unemployment benefits ran out, etc., you get a closer picture of what the unemployment rate is. That number is in the last row labeled U-6.
U-6 is much higher at 8.3%. Both numbers would be way higher still, were it not for millions dropping out of the labor force over the past few years.
Some of those dropping out of the labor force retired because they wanted to retire. The rest is disability fraud, forced retirement, discouraged workers, and kids moving back home because they cannot find a job.
Covid-19 had an enormous impact on the labor force. Many dropouts are really unemployed but are not counted as such, said Fed Chair Jerome Powell over a year ago. That still holds true today.
Strength is Relative
It’s important to put the jobs numbers into proper perspective.
In the household survey, if you work as little as 1 hour a week, even selling trinkets on eBay, you are considered employed.
In the household survey, if you work three part-time jobs, 12 hours each, the BLS considers you a full-time employee.
In the payroll survey, three part-time jobs count as three jobs. The BLS attempts to factor this in, but they do not weed out duplicate Social Security numbers. The potential for double-counting jobs in the payroll survey is large.
Household Survey vs. Payroll Survey
The payroll survey (sometimes called the establishment survey) is the headline jobs number, generally released the first Friday of every month. It is based on employer reporting.
The household survey is a phone survey conducted by the BLS. It measures unemployment and many other factors.
If you work one hour, you are employed. If you don’t have a job and fail to look for one, you are not considered unemployed, rather, you drop out of the labor force.
Looking for jobs on Monster does not count as “looking for a job”. You need an actual interview or send out a resume.
These distortions artificially lower the unemployment rate, artificially boost full-time employment, and artificially increase the payroll jobs report every month.
Recovery Not Complete
This recovery has been fast, but it was also the deepest on record. Jobs are still over 4 million short of the pre-pandemic level.
Some losses are permanent due to a surge in work-at-home and online shopping (less office space and malls needed).
Final Thoughts
Federal pandemic benefits ended in September although many Republican states stopped the benefits earlier.
Many millions of people were paid more to not work than they made working. If they saved that money, they have a cushion that will allow them to wait for a job they really want.
Meanwhile, huge distortions remain.
Surprise of the Day
This was a stronger than expected jobs report with upward revisions as well. The reaction in the bond market was interesting. Yields fell steeply at the long end despite the apparent jobs strength.
The Fed Announces an Autopilot Strategy
Question of the Day: Can the Fed stick with its announced autopilot stance?
For discussion, please see The Fed Announces an Autopilot Strategy: How Long Can It Stick With It?
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Mish
There’s always something that could go wrong—as the Delta variant proved this summer and fall. A more powerful Covid variant less susceptible to vaccines could emerge. The Federal Reserve, which helms the economy, could screw up. Inflated asset prices—namely, stocks—could turn south. But a lot has already gone wrong, since Covid arrived, and stress tests have already revealed vulnerabilities in supply lines and other weak links in the global economy. How much worse could it get?
President Biden is in the cellar now, with inflation, political gridlock and other factors pushing his approval rating well below 50%. Biden’s Democratic Party looks like an unmanageable herd of cats that can’t establish a functional majority in Congress, even with numerical control of both houses. Voter disgust in 2021 reflects a stalled and confusing Biden agenda, and voters could send a lot more Democrats packing in the 2022 midterm elections.
But the economy probably won’t be the reason. A lot of momentum is lining up that could make 2022 the breakout year 2021 was supposed to be, but wasn’t. Eventually, it will be safe to believe it.
The CFNAI is a weighted average of https://www.chicagofed.org/-/media/publications/cfnai/background/cfnai-indicators-list-pdf.pdf of national economic activity. It is constructed to have an average value of zero and a standard deviation of one. Since economic activity tends toward trend growth rate over time, a positive index reading corresponds to growth above trend and a negative index reading corresponds to growth below trend.
The 85 economic indicators that are included in the CFNAI are drawn from four broad categories of data: production and income; employment, unemployment, and hours; personal consumption and housing; and sales, orders, and inventories. Each of these data series measures some aspect of overall macroeconomic activity. The derived index provides a single, summary measure of a factor common to these national economic data.
The CFNAI corresponds to the index of economic activity developed by James Stock of Harvard University and Mark Watson of Princeton University in an article, “http://www.sciencedirect.com/science/article/pii/S0304393299000276,” published in the Journal of Monetary Economics in 1999. The idea behind their approach is that there is some factor common to all of the various inflation indicators, and it is this common factor, or index, that is useful for predicting inflation. Research has found that the CFNAI provides a useful gauge on current and future economic activity and inflation in the United States.