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Patrick J. O'Keefe Shares Expectations for October Labor Report


11/4/13

by Patrick J. O'Keefe, Director of Economic Research

On Friday, November 8, the Bureau of Labor Statistics (BLS) will release data on labor market conditions in the United States during the month of October.

Top Forecast:

  • We expect Friday’s data to show that jobs increased nationally in October, while the key measures of labor force utilization (i.e., labor force participation, jobholding, and unemployment) were stable over the month.
  • Specifically, we expect BLS to report that nonfarm employment rose by 110,000 in October, with all of the gain occurring in the private sector.
     

The accompanying chart book displays the most recent labor market indicators.

Federal Shutdown: The BLS’s shutdown-related protocols on data collection and classification are available at: http://www.bls.gov/bls/shutdown_2013_cps_ces.htm.

Background - Employment [Charts 1-28]:  Since the jobs recovery began in March 2010, the U.S. economy has regained four-fifths (7.0 million of the 8.7 million) of the jobs lost during the 2008-2009 recession. 

Employment has increased an average of 162,100 jobs per month over 43 consecutive months. Nonetheless, the U.S. economy had 1.8 million (1.3%) fewer jobs in September than when the recession began. 

Subsequent to the 10 previous downturns between 1948 and 2007, it took an average of 11 months for the economy to return to its pre-recession employment peak; the longest took 20 months. At its average gain to date, the current recovery (already 43 months long) will need another 10 months to regain the pre-recession level.

In September, the recovery decelerated as jobs growth both slowed and narrowed, repeating a cycle of an early-year acceleration giving way to a summer slowdown.

That deceleration is readily evident in the three-month average jobs gain, which smoothes monthly fluctuations. In February, the three-month average was 233,000; in September it was 143,300 (-38.5%), its lowest in more than a year. 

During the jobs recovery, growth has been narrowly concentrated. Private employers added 7.6 million jobs over the past 43 months, but public agencies lost 590,000. 

During 2013, the recovery’s concentration has become more pronounced, with the distribution of growth narrowing within the private sector. In February, goods producers contributed 24.6% of the three-month average gain, in September 8.3%. Even as service providers’ share of growth increased, it narrowed: in the 3 months through September, retailing and temporary help comprised almost two-fifths (38.4%) of the private sector’s average gains, more than double February’s 15% average.

Year-to-date, total jobs growth exceeded (+2.0%) the first nine months of 2012, largely due to a jump in state-level employment in September.

Private employment gains in 2013 are up 1.3% from last year’s comparable period.

As noted above, since the jobs recovery began in March 2010, the U.S. economy has regained 7.0 million of the 8.7 million jobs lost during the contraction.

The 1.8 million deficit is more than accounted for by fewer jobs in manufacturing (-1.8 million), construction (-1.7 million), and government (-0.6 million). Employment among private service providers, on the other hand, is 2.3 million higher than immediately prior to the downturn. 

Background - Labor Force [Charts 29-41]: The employment data discussed above are based on a survey of employers; a separate survey of households is the source of data regarding the labor market status of work-age residents. To be counted as a labor force participant, an individual must be a non-institutionalized civilian, 16 years or older, and either a jobholder or jobseeker (i.e., having actively looked for work in the prior 4 weeks). 

Conditions improved modestly in September. The labor force grew a bit (+0.1%) on small changes in the number of jobholders (+0.1%) and jobseekers (-0.5%). 

Jobholding (i.e. individuals with jobs) was the highest since October 2008 and 4.5% above December 2009, the low point of the recession.
The increase in jobholding was not sufficient to raise the employment rate (i.e., jobholders as a percent of the work-age population), the broadest measure of the utilization of the nation’s human resources. At 58.6%, the employment rate was below 59% for the 49th consecutive month, the longest streak below that threshold since 1979.  In the year prior to the downturn, the employment rate averaged 63%. 

With total unemployment declining for the third straight month, the unemployment rate (i.e., jobseekers as a percent of the labor force) slipped to 7.2%, the lowest since November 2008.

Long-term joblessness (i.e., actively seeking work for at least 27 weeks) fell in September, more than fully reversing the prior month’s uptick.  As a result, the percentage of jobseekers who have been unemployed for 27 or more weeks is almost two-fifths (-38.2.0%) below the April 2010 peak.

Applications for unemployment insurance benefits (chart 33), a proxy for layoffs, rose sharply (16.8%) in October. The largest increases occurred in the first two weeks of the month, coincident with the Federal shutdown. (Federal workers are covered by a separate program and, therefore, are not included in these data.) A portion of the rise is related to the shutdown, but some of it reflects unrelated administrative adjustments.


The statements, opinions, and conclusions contained herein are based solely upon the author’s own studies, research, and personal experience. Neither CohnReznick nor the author make any representation or warranty as to the accuracy or completeness of this information. CohnReznick and the author expressly disclaim any liability for any loss or damage which may be incurred, of any kind whatsoever, as a result of or arising from the use of any of the information contained herein or reliance on the accuracy or completeness of it.

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