Tuesday, October 30, 2012

September Unemployment Report Review

Unemployment rate drops to 7.8%; Broad employment gains in most areas.

US national unemployment rate fell to 7.8% from an August rate of 8.1%. The BLS household survey reported an additional 873, 000 people found employment in September. The number is a crazy, high number and well above the yearly average of 150K.  You can bet it will be reduced in later reports. The establishment (non farm payroll) survey showed companies hired an additional 114000 more workers. The NFP number is from the BLS business survey and is considered more accurate than the household survey. All major employment rates declined from the previous month. The president reacted positively to the numbers. Mitt Romney said they were too low and the country could do better. The stock market was slightly down on the news.

Adding some comedy to the mix were the wacky comments of Jack Welsh (CEO of GE – 1981 to 2001). Jack said in a twitter message that the numbers were manipulated to benefit Obama. The funny part is that Neutron Jack’s public ignorance of unemployment statistics calls in to question his reputation and leadership at GE. Was firing 100,000 GE employees strategic or lucky ? Either way, Jack Welch, like Donald Trump, has moved from business leader to entertainer.

The black unemployment rate moved down to 13.4%. The historic average since 1972 is 12.3%. The size of the black labor force dropped by about -34K overall and was affected by 84K additional people who found jobs and 70K who dropped out of the labor market. Add in the fact that the black population grew by 37K and you get a declining black unemployment rate. The national labor force participation rate rose to 63.6%. Black labor force participation was 61.7 (67% for Black men, 62% for Black women and 29% for black teenagers) Unemployment by race dropped in all major groups. The black national rate shrank to 13.4%, the white rate dropped to 7.0% and the Hispanic rate also fell to 9.9%. The black teenage unemployment was reported at 37%.

The long-term unemployed (27 weeks or more) decreased to 4.84 million people which represents 40% of the unemployed. The “work part-time wants full-time” number was 8.6 million. These people are considered under employed. Two and a half million workers were marginally attached to the labor pool. They have looked for work in the last 12 months but not in the last four weeks. And there were 802K discouraged workers (part of marginally attached) who are not looking because they believe there is no jobs for them.

Non-Farm Payroll Increased by 114,000 jobs. It was the 24th straight month of job growth.

The economy has recovered more than half of the jobs lost during the recession.

A very rough estimate predicts all recession jobs will be recovered by about June 2014 regardless of who is president. Below is a crude regression line based on job gains in the household survey and the business survey which is used to predict the June 2014 date.

Non-Farm Payrolls

As we mention in the summary, non-farm payrolls added 114,000 jobs.  Private sector hiring added 104,000 jobs (vs. 142,000 last month) and government employment added 10K jobs. Job growth was concentrated in healthcare and transportation.   The losers were manufacturing(-16K), information technology and local government.

Manufacturing employment has continued to fall since president Obama mention a resurgence in US manufacturing.

Non-farm payrolls were revised in July upward by 40,000 (from 141K to 181K) and upwards for August by plus 46,000 from (96K to 142K). That’s an addition of 86,000 jobs additional jobs.

The chart below shows the job growth was broadly based with healthcare creating the highest number of jobs.

Average work week was unchanged at 34.5 hours and wages added 7 cent in September.

ADP reported an increase in private payrolls of 114,000 positions for September.

US Monster Employment Index moved down 2% to 153 from 56 in August. Hiring was down 2% compared to same month last year. 

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