Mixed Jobs Report for October

On the heels of a great GDP report last week, the jobs numbers released today by the BLS are disappointing.  The good news is that 150,ooo new jobs were added to nonfarm employment. However, since 2020, we have gotten used to much larger increases in employment. For example, in the 12 preceding months, the economy added an average of 258,000 jobs per month.  The graph below shows growth in U.S. nonfarm employment since 2021.  Clearly, the increases are slowing since days just after COVID-19.


In addition, the unemployment rate ticked up to 3.9% in October (from 3.8% in September) and the labor force participation rate edged down to 62.7 % (from 62.8%).  Taken together, this is just not a strong jobs report.

The October numbers may be lower because the survey was taken during major work stoppages — notably the strikes by the United Automobile Workers and related layoffs. Since then, the U.A.W has informed the workers who were on strike to return to their jobs. The union has reached tentative contract agreements with the three major U.S. auto companies.

Strong Jobs Growth in September

Total nonfarm employment grew by 336,000 jobs in September, according to the latest jobs report from the Bureau of Labor Statistics.  The big jump in employment  held keep the unemployment rate near historic lows, at just 3.8 percent.  The graph below shows total nonfarm employment in the U.S. since the beginning of 2012.


The graph makes it clear the the U.S. economy is back at (or very near) the trend line from before COVID-19 hit the economy.

This Wall Street Journal article includes a nice graphic (pasted below) that dissects the jobs growth into four major sectors: goods (manufacturing), government, leisure and hospitality, and other services.

As the graphic makes clear, most U.S. jobs growth comes in service-sectors, rather than goods-producing.  Manufacturing gets a lot of attention in the media and from politicians, but service jobs are really driving U.S. employment.




Still No Recession

Today's jobs report brings more strong data and very little change from the past few reports. The unemployment rate (pictured below) remains at historically low levels, falling to 3.5% in July, and jobs growth remains robust, with 187K new jobs added.


On the other hand, the strong unemployment rate is probably overstating the overall health of the labor market.  As we have talked about previously, the labor force participation rate (LFPR) remains at low levels.  You can see in the figure below that the current level (62.6%) is still way below the pre-pandemic level, which was also very low relative to U.S. economic history. 


This low LFPR indicates that there are still millions of potential workers not in the labor force.

Strong Jobs Growth in January

Omicron was supposed to derail the economic recovery but January employment data suggest otherwise.  The Employment Situation Summary, affectionately known as "The Jobs Report," for January estimates job gains of 567,000 in January, far exceeding expectations.  The graph below shows nonfarm employment since January 2012.


As a benchmark, a good month of labor market growth is about 200,000 new jobs a month.  Economists were worried that January might come in at less than 200,000.  However, even with this strong growth, total jobs in the U.S. are still well below the pre-COVID peak of  152.5 million in February 2020.

The labor force participation rate (LFPR) also increased in January - up to 62.2% from 61.9%. And while this also remains well below the pre-COVID highs (see graph below), it is certainly good to see more people entering the labor force. 


Finally, the unemployment rate (graphed below) actually ticked up slightly to 4.0% in January. 


Students often wonder how the unemployment rate can rise when many new jobs are added. In January, this happened because the total labor force grew by 1.4 million. This is not bad news, since many workers are now re-entering the labor force.  Hundreds of thousands found work, but some did not, and so the unemployment rate rose. Even with this increase, the unemployment rate is near previous low levels. 

Jobs Growth Resumes

Today's jobs report from the BLS is a dose of much-needed good news.  The unemployment rate dropped again to 4.6 percent.  More importantly, 531,000 new jobs were added (to nonfarm employment).  The graph below shows monthly growth in nonfarm employment in this calendar year.


After robust growth in the summer months, fewer jobs were added in August and September. All of this is closely linked to the spread of COVID, as the Delta variant spread rapidly in August and September, before slowing in October.  

Let's hope that today's announcement regarding the Pfizer COVID-19 pill will lead to even more economic progress over the coming months. 

Jobs Growth Slows Even as Unemployment Falls

The latest jobs report from the BLS is one of those weird times when the unemployment rate falls even while the overall report is not positive.  All of this stems from this strange and uneven recovery from the COVID-19 recession in 2020.  

Let's start with the good.  The graph below shows the unemployment rate over the past 5 years.  The latest data shows a 0.4% drop to just 4.8% in September.  Normally, this would be heralded as great news.


Now, let's look at jobs growth by graphing total nonfarm employment.  In September, nonfarm employment rose by 194,000.  This would often be considered solid growth.  But right now, we are recovering from a drastic drop in overall employment.  Given the plunge in total jobs in 2020, this level of growth is just not enough to get us back to a healthy level of jobs anytime soon.  In the graph below, you can see that jobs growth is slowing and that we still have 5 million jobs to add before we are back to the pre-pandemic level of employment.


Students might wonder how such a significant drop in the unemployment rate can be viewed as anything but great news.  It can help to show the labor force participation rate (LFPR).  In September, the LFPR actually fell, from 61.7% to 61.6% (see graph below).  This is especially concerning as we are recovering from the huge drop in employment and firms are struggling to find workers. 


It's always good for the unemployment rate to drop 0.4 percentage points.  This means that people who are actively looking for work are having an easier time securing a new job.  But it is hard to rejoice in this economy right now with so many sitting on the sidelines and employers having difficulty luring them into the labor market.  It will be interesting to follow these trends over the next few months.

Jobs Growth Slowing

The latest jobs report brings news of lower unemployment and a growth in jobs in August. The unemployment rate for August, ticked down to 5.2% and nonfarm employment increased by 235 thousand jobs. In normal times, this would be great news. But these are not normal times.  


We can't celebrate over this news because it is a clear slowing of the recovery that was roaring through the early summer months.  In June and July, the U.S. economy added 962 and 1,053 thousand jobs.  In comparison, the August figures are just discouraging.  

Furthermore, we've still got a long way to go before the economy really recovers from the darkest COVID days of last year.  The graph below shows total nonfarm employment in the U.S.  This is how we generally measure the level of jobs in the country. At the beginning of 2020, there were more than 152 million jobs.  This plummeted to just 130 million during the COVID shutdowns, but the recovery thus far is clearly incomplete.  Total nonfarm employment in August was just 147 million, down 5 million from the peak and at least 7 million from the pre-recession trend.


We all know the slowing is due to the Delta variant of COVID-19. And the effects are very real.  For example, as the BLS jobs report notes, 5.6 million workers were unable to work because "their employer closed or lost business due to the pandemic."

Solid Jobs Growth in January

The Bureau of Labor Statistics released the Employment Situation Report this morning, as they generally do on the first Friday of the month. Throughout this semester, we follow at these reports and look closely at the number of jobs added, the unemployment rate and the labor force participation rate. In the month of January, the BLS estimates that 200,000 jobs were added, making it the 88th consecutive month of positive job growth and resulting in an unchanged unemployment rate of 4.1%. It is the fourth consecutive month that the unemployment rate is at 4.1%.


The labor force participation rate remained at 62.7% for the fourth consecutive month (see below).  This is low by historical standards and has not increased as the economy gained steam over the past five years. This worries many economists as it seems that potentially available workers are not currently a part of the labor force.


The big number in this month's report is the average hourly earnings for private-sector workers which increased 0.34% this month, bringing the annual growth rate to 2.9%, the largest annual increase since 2009. This could be a sign that the tight labor market is finally making enough pressure to bring wages up. 

New Jobs Report Brings Good and Bad News

The U.S. unemployment rate fell to just 4.2% in September, the lowest rate since 2001, according to the latest Employment Situation summary published by the BLS today.  Additionally, the labor force participation rate increased to 63.1%. The highest level since March 2014. Even though the labor participation rate is still 3 percentage points lower than before the Great Recession, its steady numbers coupled with low unemployment rate, suggests that the US might be operating near full employment.


On the other hand, the seven year streak of positive job gains ended, at least temporarily, as the BLS reports 33,000 fewer jobs in September.  Probably, the main causes are Hurricanes Harvey and Irma. In the first week of September, when Hurricane Harvey hit, jobless claims spiked from 62,00 to 298,000.



Unemployment Rate Drops to Lowest Level since 2007

The March jobs report was released by the BLS this morning.  The real news is that the economic recovery continues.  In terms of data, the unemployment rate dropped to 4.5 percent, the lowest level since May 2007 (nearly ten years!).  That is the good news.


But while the unemployment rate dropped, the number of jobs added was less than recent trends.  In March, 98,000 new jobs were added, but this is significantly below the average of 202,000 for the past five years.


Two words of caution are in order.  First, we don't want to draw significant conclusions from a single jobs report.  On a month-to-month basis, there is a lot of noise in the data.  It is best to consider long-run trends.  In this case, the long-run trend on employment is certainly positive. 

Second, it is still to early to credit or blame our new government leaders for any economic economic conditions that may show up in the data.