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Economy in Brief

U.S. Nonfarm Payrolls' Modest Rise Aided By Strike's End
by Tom Moeller  October 7, 2011

Last month's reading for jobs growth was better, but not great. Nonfarm payrolls rose 103,000 last month after August and July increases which were upwardly revised. Several factors, however, discount any notion of broad-based labor market improvement. 1) The latest figure was boosted by 45,000 telecom strikers returning to work. 2) Excluding strikers, payrolls were no better than advertised in earlier labor market reports for September. 3) In percentage terms, the 0.1% September increase was hardly changed from the monthly increases over the last year. 4) The gain brought with it no decline in the unemployment rate, still at 9.1%. 5) Upward revisions to earlier months' figures were small and confined mostly to government payrolls. The Consensus estimate for September payrolls was for +56,000.

Nonfarm payrolls rose 103,000 last month following gains of 57,000 during August and 127,000 during July, upwardly revised from no-change and 85,000, respectively. The latest figure reflected the return to work of strikers at Verizon. Factory sector payrolls fell another 13,000 reflecting broad-based industry weakness. Construction employment rose a moderate 26,000 leaving the y/y change at 0.7%. In the private service sector, payrolls rose 119,000 boosted by returning strikers. Elsewhere, gains were moderate. To the upside, professional & business service employment rose an improved 48,000 (3.4% y/y), jobs in health care & social assistance gained 40,800 (2.2% y/y) and retail trade employment rose 13,600 (1.1%). Temporary help jobs rose 19,400 (8.4% y/y). On the weak side were leisure & hospitality jobs which fell 4,000 (+0.9% y/y) and financial activities where employment slipped 8,000 (-2.2% y/y). Government employment fell 34,000 (-1.3% y/y) with declines across sectors.

Elsewhere in the establishment survey, average weekly hours worked recovered to 34.3 for September. Along with the job gains, this left the Q3 index of aggregate hours worked & payrolls unchanged from Q2, following that quarter's 0.9% rise.

The modest jobs gains were accompanied by a 0.2% (2.0% y/y) increase in average hourly earnings. The gain followed an upwardly revised reading of no-change in August but the y/y gain of 2.0% was half that in 2007. Earnings in the service sector rose 0.2% m/m (2.0% y/y) and factory sector earnings were unchanged (+1.4% y/y).

From the household survey, the unemployment rate held at an expected 9.1% for the fourth month in the last five. That reflected a 398,000 increase (0.5% y/y) in employment and a 423,000 rise (-0.1% y/y) in the labor force. The overall unemployment rate, including involuntarily part-time workers as well as those marginally attached, rose to 16.5%, its highest level this year.

The labor force participation rate slipped m/m to 52.5%. The number out of the labor force but want a job fell 14.2% y/y. The number of workers unemployed for 52 weeks or longer slipped m/m to 4.386M (+2.3% y/y) but remained near its high. The average duration of unemployment reached a new high of 40.5 weeks. The breadth of employment increase over the last three months fell to 56.2%, its lowest in twelve months.

The figures referenced above are available in Haver's USECON database. Additional detail can be found in the LABOR and in the EMPL databases. The expectation figures are from Action Economics and are in the AS1REPNA database.

What Is The New Normal Unemployment Rate? from the Federal Reserve Bank of San Francisco is available here.

Employment: (M/M Chg., 000s) Sep Aug Jul Y/Y 2010 2009 2008
Payroll Employment 103 57 127 1.1% -0.7% -4.4% -0.6%
    Previous -- 0 85 -- -- -- --
 Manufacturing -13 -4 34 1.7 -2.7 -11.6 -3.4
 Construction 26 -7 10 0.7 -8.1 -16.0 -6.1
 Private Service Producing 119 51 120 1.6 -0.1 -3.5 -0.2
 Government -34 15 -46 -1.3 -0.3 0.3 1.3
Average Weekly Hours 34.3 34.2 34.3 34.2
34.1 33.9 34.5
Average Hourly Earnings (%) 0.2 0.0 0.3 2.0 2.4 3.0 3.8
Unemployment Rate(%) 9.1 9.1 9.1 9.6
9.6 9.3 5.8
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