Country / Language

Patrick J. O'Keefe Shares Expectations for September Jobs Report


9/29/14

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

On Friday, October 3, the Bureau of Labor Statistics (BLS) will release data on labor market conditions in the United States through September 2014.

Forecast

  • We expect the BLS to report that total nonfarm employment rose by 245,000 jobs in September. If so, the year-to-date jobs increase will be the largest since 1999 and private sector employment growth the fastest since 1998.
  • We look for the BLS data to show an increase in labor force participation as the number of jobholders finally surpassed its pre-recession peak and the number of unemployed (including returning discouraged jobseekers) rose modestly.
  • The Bureau is likely to report that the unemployment rate remained at 6.1%.
     

The accompanying chartbook displays the most recent labor market indicators.

Background - Employment [Charts 1-29]: In the first eight months of 2014, total nonfarm payrolls rose 1.7 million as growth in private sector jobs (also up 1.7 million) was bolstered by slow, but sustained increases in public sector employment. 

Private employment has increased for 54 consecutive months; government jobs rose in six of the past seven months.

The jobs recovery, which ran from March 2010 through May 2014, required 51 months  ̶  more than four times the post-1948 average  ̶  to recover the downturn’s losses.

Total employment has exceeded the pre-recession peak for four months, but the cumulative gain is slight (+0.5%). 

August’s employment increase was the weakest since January. In the intervening six months, employment gains consistently exceeded 200,000, the first such string since 1997. (CohnReznick anticipates Friday’s report to include a significant upward revision to the preliminary estimate that employment rose in August by only 142,000 jobs).

Year-to-date through August, 2014’s employment gains have exceeded 2013’s comparable period by 9.6%. The acceleration is largely attributable to the public sector’s shift from shedding jobs (-35,000) in 2013 to adding them (+43,000) in 2014. 

In August, private employment was 1.2 million (1.1%) above the pre-recession peak; government employment was 491,000 (-2.2%) below.

Within the private sector, employment among goods producers – despite adding 1.5 million jobs during the recovery – is 2.8 million below the January 2008 peak.

Manufacturers have 1.6 million fewer jobs; construction firms 1.4 million less. Both had been declining prior to the recession. Gains in extraction employment (i.e., logging, mining, and drilling), a sliver (0.8%) of all private jobs, have partially offset those losses.

Private service providers have added 8.5 million jobs since the jobs recovery began in March 2010; services payrolls in August exceed the pre-recession peak by 4.0 million.

The gains among private service providers remain uneven, however. 

Two lower-paying industries (Food/Drink and Temporary Help) account for more than one-quarter (27.2%) of service providers’ gains during the recovery; that more than doubles their share (12.9%) during the five years (2003-2007) prior to the recession. 

And some service providers have yet to regain their pre-recession levels, including: Information Services (-359,000), Financial Activities (-314,000), Retail Trade (-203,900), and Wholesale Trade (-150,800). 

Government employment in August was 491,000 below the downturn’s start. Reductions by local governments, which provide almost two-thirds of all public sector jobs, account for more than three-quarters of the shortfall.

Background - Labor Force [Charts 30-41] The employment data discussed above are based on a survey of employers. A separate survey of households acquires data regarding the labor market status of 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 sought work in the prior four weeks). 

Labor Force participation: After reaching a historic peak in 2000 (Y2K), the labor force participation rate drifted gradually downward on shifting demographic trends. 

The decline accelerated with the onset of the 2008-2009 contraction and the rate fell to a 36-year low (62.8%) at the end of 2013. It has hovered near that level since.

While participation has declined among youth (16-24 years of age) and those in their prime earning years (25-54), it has risen among those 55 and older.

In this year’s second quarter (Q-2), the participation rate of youth (16-24 years of age) was 54.7%; it had peaked at 65.9% in Y2K. At mid-year, participation within the prime earnings cohort (25-54) was 80.9%; it peaked at 84.2%, most recently in Y2K.

At 64.2%, participation among those nearing retirement (55-64) exceeded that cohort’s Y2K peak rate (59.5%). For those 65-and-over, the rate was 18.6%, a tad below last year’s 50-year high, but more than two-fifths higher than the Y2K peak.

From the recession’s start through August, the work-age population rose by 15.6 million and the labor force rose by 3.6 million – an incremental participation rate of 23.1%. 

Coincidentally, the total participation rate fell from 66.2% to 62.8%.

Jobseekers: The number of individuals seeking work declined in August (down 80,000), partially offsetting July’s increase (up 197,000). With the exception of June, the number of unemployed was the lowest since August 2008.

The unemployment rate slipped to 6.1% in August as the labor force declined marginally (-0.04%) on a miniscule increase (+0.01%) in jobholders and a slight decline (-0.8%) in jobseekers.

Jobholders: August’s rise in the number individuals at work was the fourth consecutive monthly increase, bringing the number of Americans with jobs to within a whisker (0.2%) of its November 2007 peak. 

During the jobs recovery, the number of jobholders grew somewhat faster than the work-age population and, therefore, the employment rate (i.e., the proportion of work-age individuals with jobs) rose gradually. 

For the third month, the employment rate was 59.0%, the highest in five years.

Other indicators of labor force utilization were mixed in August: under-employment and long-term unemployment declined while discouragement rose.

Search Our People

Search Our People

Look ahead. Gain insight. Imagine more. Is your business ready to break through?

View our new TV commercial..

Industry Outlooks

Industry Outlooks

Gain insight into what is ahead for the Commercial Real Estate, Technology and Middle Market Private Equity industries.

READ MORE

Learn about our upcoming events.

READ MORE

Working With Us

Working With Us

What makes CohnReznick different from others in our profession? And what should our clients come to expect when working with us? The answer is The CohnReznick Advantage. Contact us to learn how we can out the CohnReznick Advantage to work for your business.


People

The value of an organization is determined by the skills and qualities of its leaders. With more than 280 partners serving clients nationwide, CohnReznick is renowned for the diverse experiences, knowledge and backgrounds of its leadership.

Learn More

Services

We align our services in three segments: Accounting and Assurance, Tax, and Advisory. This approach allows us to provide holistic solutions to complex business problems and to seize upon opportunities requiring an integrated approach.

Learn More

Industries

Accounting and tax issues different significantly based on an organization's industry. We provide clients with expertise in nearly two dozen industries – we know the opportunities, the obstacles, the competitive landscape.

Learn more

Insights

CohnReznick professionals are thought leaders in their industries. Clients benefit from relevant and timely economic, legislative and industry insights that can keep them a step ahead of competition.

Learn More

Global Reach

Our involvement in the Nexia International network of firms enables us assist our clients wherever they do business-providing local expertise and connections wherever they needed. Nexia is comprised of 20,000 professionals operating in over 100 countries.

Learn More