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September jobs report: once again, two very different surveys net to a “relatively” disappointing gain

Summary:
- by New Deal democratAs I previously indicated, two items I was particularly watching for in this morning’s report were (1) manufacturing hours and payrolls - to see if that white-hot sector was holding up in the face of supply bottlenecks, and (2) whether there were continued gains in leisure and hospitality jobs, or whether Delta had caused those to stall. While this morning’s report came in well short of expectations, with the big positive revisions to previous months the 6 month average of monthly gains is still over 600,000.Here’s my synopsis of the report:HEADLINES:194,000 jobs added. Private sector jobs increased 317,000, but government (mainly education) shed -123,000 jobs, having a great deal to do with haywire seasonal adjustments this year. The alternate, and more volatile

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 - by New Deal democrat


As I previously indicated, two items I was particularly watching for in this morning’s report were (1) manufacturing hours and payrolls - to see if that white-hot sector was holding up in the face of supply bottlenecks, and (2) whether there were continued gains in leisure and hospitality jobs, or whether Delta had caused those to stall. 

While this morning’s report came in well short of expectations, with the big positive revisions to previous months the 6 month average of monthly gains is still over 600,000.

Here’s my synopsis of the report:

HEADLINES:
  • 194,000 jobs added. Private sector jobs increased 317,000, but government (mainly education) shed -123,000 jobs, having a great deal to do with haywire seasonal adjustments this year. The alternate, and more volatile measure in the household report indicated a gain of 526,000 jobs, which factors into the unemployment and underemployment rates below.
  • The total number of employed is still -5,333,000, or -3.3% below its pre-pandemic peak.  At this rate jobs have grown in the past 6 months (which have averaged 653,000 per month), it will take another 8 months for employment to completely recover.
  • U3 unemployment rate declined -0.4% to 4.8%, compared with the January 2020 low of 3.5%.
  • U6 underemployment rate declined -0.3% to 8.5%, compared with the January 2020 low of 6.9%.
  • Those not in the labor force at all, but who want a job now, rose 287,000 to 5.969 million, compared with 5.010 million in February 2020.
  • Those on temporary layoff decreased 128,000 to 1,124,000.
  • Permanent job losers declined -236,000 to 2,251,000.
  • July was revised upward by 38,000, while August was revised upward by 131,000, for a net gain of 169,000 jobs compared with previous reports.
Leading employment indicators of a slowdown or recession

These are leading sectors for the economy overall, and will help us gauge how strong the rebound from the pandemic will be.  These were mixed, and net to neutral:
  • the average manufacturing workweek, one of the 10 components of the Index of Leading Indicators, was unchanged at 40.4 hours.
  • Manufacturing jobs increased 26,000. Since the beginning of the pandemic, manufacturing has still lost -343,000 jobs, or -2.8% of the total.
  • Construction jobs increased 22,000. Since the beginning of the pandemic, -201,000 construction jobs have been lost, or -2.6% of the total.
  • Residential construction jobs, which are even more leading, rose by 2,100. Since the beginning of the pandemic, 42,500 jobs have been *gained* in this sector, or +5.1%.
  • temporary jobs declined by -5,200. Since the beginning of the pandemic, there have still been 256,800 jobs lost, or -8.7% of all temporary jobs.
  • the number of people unemployed for 5 weeks or less increased by 154,000 to 2,237,000, which is 155,000 higher than just before the pandemic hit.
  • Professional and business employment increased by 60,000, which is still -385,000, or about -1.8%, below its pre-pandemic peak.

Wages of non-managerial workers
  • Average Hourly Earnings for Production and Nonsupervisory Personnel: rose $0.14 to $26.15, which is a 5.5% YoY gain. This continues to be excellent news, considering that a huge number of low-wage workers have finally been recalled to work. 

Aggregate hours and wages:
  • the index of aggregate hours worked for non-managerial workers rose by 0.5%, which is a  loss of -2.8% since just before the pandemic.
  •  the index of aggregate payrolls for non-managerial workers rose by 1.0%, which is a gain of 6.0% since just before the pandemic.

Other significant data:
  • Leisure and hospitality jobs, which were the most hard-hit during the pandemic, gained 74,000 jobs, and is still -1,594,000, or -9.4% below their pre-pandemic peak.
  • Within the leisure and hospitality sector, food and drink establishments gained 29,000 jobs, and is still -930,400, or -7.6% below their pre-pandemic peak.
  • Full time jobs increased 591,000 in the household report.
  • Part time jobs increased declined -36,000 in the household report.
  • The number of job holders who were part time for economic reasons declined by -1,000 to 4,468,000, which is an increase of 70,000 since before the pandemic began.

SUMMARY

Once again there were two very different reports: the establishment survey was relatively weak for the second month in a row (again strongly influenced by the seasonality of the education sector), while the household survey was very strong.

In general there were weak gains across the board in all sectors of business hiring. Of the two areas I was most paying attention to, manufacturing hours were steady, and payrolls increased at their typical rate since the pandemic lockdowns ended. Meanwhile the food and beverage and wider leisure and hospitality sectors had their second month of very weak gains in a row, indicating a major impact from the Delta wave on consumer behavior. The most positive news was the continued strong increase in aggregate employee hours and wages, plus the second month in a row of very positive revisions to the prior two months’ data.

On the household side of the report, full time jobs increased sharply, while part time jobs declined slightly, and total jobs increased over half a million for the second month in a row. Both the unemployment and underemployment rates declined sharply once again. On the other hand, those not in the labor force who nonetheless want a job now increased.

I suspect that the more volatile household report is giving us a slightly leading signal vs. the establishment report, so I am discounting a little bit the mediocre job sector gains in the establishment report. At the same time, it is clear that the pandemic continues to have a big negative effect on services that involve indoor activities. 

All in all, a decent positive report - just not as good as most people were hoping for.

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