September Employment Numbers Disappointing
Apparently U.S. employers cut back on hiring over the last two months. The expectation by economists polled by Reuters was that there would be a net gain of 203,000 jobs in September.
But when the BLS released their “preliminary estimates” for the employment situation for September non-farm employment rose by only 142,000 in September. And to make matters worse, August numbers were adjusted down resulting in the smallest Seasonally adjusted two month gain in over a year.
The BLS Commissioner’s report stated, “Job gains occurred in health care and information, while mining employment fell… The number of persons unemployed for less than 5 weeks increased by 268,000 to 2.4 million in September, partially offsetting a decline in August… Thus far in 2015, job growth has averaged 198,000 per month, compared with an average monthly gain of 260,000 in 2014.”
So 2015 has averaged only 76% the job growth that 2014 had and at 142,000 September was only 54% of 2014’s average. 34,000 new jobs were created by healthcare, 31,000 came from professional and business services, 24,000 from retail trade employment, and food services and drinking places added 21,000 jobs. On the other hand, mining and mining support lost -17,000 jobs. So it appears all the high paid mining workers are now working at either McDonald’s or Walmart. Not a good trend at all!
See Current Employment Commentary for more information.
The U.S. Bureau of Labor Statistics (BLS) also released the newest unemployment data for September 2015 today. According to the BLS, the current “Seasonally Adjusted” Unemployment Rate for September is 5.1% identical to August. The BLS reported the “Unadjusted” Unemployment Rate is 4.9% which is lower than August’s 5.2% . See Current Unemployment Chart for more information.
In our chart of employment vs. unemployment we compare them and although you would expect that employment and unemployment are simply the inverse of each other (i.e flip one over and you have the other) actually there are several anomalies in the data. Because the U.S. Bureau of Labor Statistics (BLS) uses two separate surveys to calculate the data it helps us see when some data doesn’t quite fit”. See Current Employment vs. Unemployment Chart.
What is the “Real” Unemployment Rate?
Back in 2010, the Gallup survey people began doing their own survey on unemployment rates , in an effort to determine the True Unemployment Rate. This month Gallup numbers are 1.4% higher than the BLS unemployment numbers. Gallup claims that unadjusted unemployment is 6.3% rather than the 4.9% claimed by the BLS. In addition, Gallup says U-6 should be 14.1% not the 9.6% claimed by the BLS. See: BLS vs. Gallup Unemployment Rates.
U3 vs. U6 Unemployment
So what is U-6? U-6 is a broader definition of unemployment. When measuring unemployment, the Bureau of Labor Statistics (BLS) uses six different measurements i.e. U-1 through U-6. This chart compares the broadest U-6 rate with the commonly used U-3 unemployment rate. The gap between the two (i.e. U-3 and U-6) increases as the employment situation worsens and decreases as we near “full employment”. For instance, in October 2000 when unemployment was at the lowest levels on this chart the difference was only 2.7%. At that point, U-3 was 3.6% and U-6 was 6.3%. However, in January 2010, at the peak of unemployment U-3 was at 10.6% but U-6 shot all the way up to 18% for a difference of 7.4%. More…
Historical Employment Levels Compared to Recessions
Generally, recessions correspond pretty well to declines in employment (i.e. increased Unemployment). This is especially true since unemployment is one of the major factors NBER uses to determine whether there is an official recession. This chart shows the actual number of jobs in addition to showing recessions shaded blue as per the official description of a “recession” by the National Bureau of Economic Research (NBER).See Employment During Recessions for more information.
Created by economist Arthur Okun, the misery index combines two simple data sets that determine how difficult life is for the average citizen but during the 1960’s when it was created the index was actually at historically low levels.
The two factors it uses are inflation and unemployment. High levels of price inflation (rapidly rising prices) will cause households to have difficulty affording the basic necessities while high unemployment will leave a high percentage of households without any income at all. High combined levels will cause havoc throughout the economy and a high level of distress, discomfort and political unrest. See Misery Index.
Seasonal adjustment is a statistical technique which is supposed to mitigate the influences of weather, holidays, the opening and closing of schools, and other recurring seasonal events from economic data. This should allow statisticians to spot nonseasonal movements in the data. So theoretically removing the seasonal fluctuations makes the data easier to compare from month to month and in practice it looks somewhat like a moving average smoothing out the peaks and valleys. So let’s look at how seasonally adjusted data compares to unadjusted unemployment data on a chart.
- Monthly Historical Unemployment Rates from 1948 through the present.