Wednesday, October 12, 2016

No News in September Labor Report. Unemployment Rate Steady at 5% and 156,000 Jobs Added

The Labor department released the September unemployment report on Friday, Oct. 7th, 2016.  There were zero surprises in the report. The official national unemployment rate was reported at 5.0%. The establishment survey report 156,000 new payroll jobs. Yawn. There were 7.9 million people unemployed, about the same as last month. Wages increased 6 cents for the month.

The unemployment rate has averaged about 5.0% for the past year.  Labor Force participation has hovered around 63%.

About 200,000 jobs per month have been added over the past year on average.

The Big Story that Wasn't

There were two big stories non-stories. First, the job report had zero impact on the presidential election. Usually one candidate screams that the report is biased or manipulated. Mitt Romney made a similar claim during the 2012 election.  This time the report was ignored.

The second big economic story is how little movement has occurred in all the large macroeconomic levels in the US. The unemployment rate is flat.  So is the inflation rate.  The GDP growth rate remains below 2.0%. Absent some shock, we are going to continue like this for a while. Some economists are calling this period: Secular Stagnation.  Economists and policy makers fear that the US has entered a long period of low growth and zero inflation. This slow period makes it difficult to solve problems like poverty, unemployment and income inequality in the US.

Black Unemployment

The Blacks' (thanks Donald) unemployment picture continued to improve. The rate has dropped 1.0% in the past year after peaking in 2011.

Black unemployment remains well above the national average.  It is nearly double that of White workers.

The number of Black people who want jobs or additional hours remained high at 13%. U-6 is the total of the unemployed, discouraged workers and workers who want extra hours. National U-6 was reported at 9.7%.

Establishment Survey and Non Farm Payrolls

As mentioned earlier the economy added 156K jobs as reported by the establishment survey. 

Jobs By Category

The biggest job gains were in business services (67K), healthcare (33K) and eating and drinking places (30K).  Retails sales also add 22,000 reported positions.

Construction add 23,000 workers while Manufacturing lost 13,000 sports (11K of which were in durable goods).  Temporary Help increased by 23,000 workers. Government lost 11K employees.

ADP reported 154,000 new payroll jobs split between 34,000 small business jobs (1-49 employees), 56,000 medium sized payroll jobs and 64,000 large corporate jobs(500 or more employees). The report has a surprising number of large company jobs.

The Paychex small business employment index declined from 100.70 to 100.52.  The index has status neutral.

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