October Jobs Report Strong with a Couple of Odd Twists.

This is my monthly look inside the BLS Employment Situation Report. There are two BLS Surveys: the Establishment and the Household. Establishment surveys about 141,000 businesses and government agencies, representing approximately 486,000 individual worksites. It is taken each month during the week which includes the 12th of the month. Household is a survey of 60,000 households taken each month during the week which includes the 12th of the month.

Each item below is suffixed with (H) if it is from the Household Survey, (E) if it is from the Establishment Survey, and (B) if it is from both.

– Nominal Nonfarm jobs was +271,000 (E). Revisions to the two previous months added 12,000 making the total increase since the last report 283,000.

– the size of the civilian noninstitutional adult population increased by 216,000 to 251,541,000 (H).

– 313,000 more people were in the labor force last month. These are people who are now working or, at least, state that they are looking for jobs (H)

With a labor participation rate of 62.4% 134,800 more jobs were necessary to keep pace with population growth. With the adjustments for the previous 2 months we had148,200 more population-adjusted jobs added than that. (H) The Employment/Population rose to 59.3%

The Labor Participation Rate was flat at 62.4%. It was 62.8% a year ago. It peaked at 67.3% in April 2000.

– Nominal job growth last month was 283,000. This accounts for the changes for the 2 previous months.
– the Unemployment Rate fell to 5.0%. It was 5.7% a year ago.(B)
– Average hourly earnings was $25.20 up from the previous month’s $25.11. (E)
– Average work week was flat at 34.5. (E)
– Private jobs were +268,000 (without adjustments for previous 2 months). Government jobs were +3,000. (E).

– Good producing jobs were +27,000. The two previous months were revised to -10,000 and -21,000 (E)
-The labor participation rate (percent of adult noninstitutionalized population who are part of the labor force) was flat at 62.2%. It was 62.8% a year ago. (H) This, not the unemployment rate, is the number which should get everyone’s attention. It is this 62.2% of the adult noninstitutionalized population who get pay checks and contribute to GDP.
Last month BLS measured 4 sets of people entering or leaving the jobs market:
– Job losers and persons who completed temporary jobs was 3,965,000 up 57,000 from previous month’s Job Losers and down 385,000 year-on-year. (H)

– Job leavers was 789,000. This includes anyone who retired or voluntarily left working. This is up 9,000 from previous month and up 7,000 year-on-year. (H)

-Reentrants was 2,430,000. Reentrants are previously employed people who were looking for a job and found one. This was -6,000 from the previous month and -426,000 year-on-year.(H)

-New entrants were 807,000. These are people who never worked before and who are entering the labor force for the first time. This was -24,000 from previous month and -251,000 year-on-year.

One line in the BLS Report is termed “people employed part-time for economic reasons.” These are people who want to work full time but their employer, for whatever reason, decide to employ them only part-time. In this month’s report there were 269,000 fewer people working part-time for economic reasons. This is much better than the recent trend.
The presentation of the total change in jobs is like looking at the final score of a game. The details tell the story:

– 283,000 more people are working.

– 313,000 fewer people are in the civilian labor force.

Largest gains were in health care and health services and Leisure/Hospitality. Construction added 31,000 jobs.

All in all this is the best BLS report in quite some time and gives the Fed the ability to justify a hike in Fed Funds. However what still remains of concern is the falling Labor Participation Rate. As a smaller percentage of the population is working it will be difficult to support Medicare and the already spending more than it is taking in Social Security. In a real sense this last point is exactly what is wrong with government policy. It concentrates too little on the long-term. Underfunding of Social Security and Medicare is the largest fiscal problem we face but politicians are not interested in a solution because increasing SS & Medicare tax is not a path toward reelection. This is relevant to the Jobs Report because it is the people working who contribute to these two funds.

There were a couple of odd things in this report.
1) The number of people over 55 working increased by 378,000. That is greater than the headline increase. Put another” the number of people under 55 who wre working in Ocyober was less that the number working in September.
2) The number of self-employed people working increased by 283,000 which was also greater that the headline +271,000

I have no idea what to make of those two oddities..