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Economy in Brief

U.S. Payroll Employment & Wages Disappoint As Jobless Rate Falls
by Tom Moeller  October 4, 2019

Job growth moderated recently. Nonfarm payrolls increased 136,000 (1.4% y/y) during September following a 168,000 August rise, revised from 130,000. July's increase also was revised higher to 166,000 from 159,000. A 145,000 September increase had been expected in the Action Economics Forecast Survey. So far this year, payrolls have risen an average 161,000 per month after a 223,000 monthly average in 2018. Average hourly earnings in the private sector edged slightly lower in September following a 0.4% increase. A 0.3% rise had been expected. Growth during the last twelve months of 2.9% remained lower than the recent y/y peak of 3.4% logged in February.

The unemployment rate fell to 3.5% following three months at 3.7%. It was the lowest rate since December 1969. Expectations were for 3.7% unemployment. Employment in the household survey rose 391,000 (1.4% y/y) and the labor force increased 117,000 (1.2% y/y). The overall jobless rate, including those who were marginally attached or working part-time for economic reasons, declined to 6.9%, the lowest level since December 2000.

From the payroll employment survey, the 136,000 rise in jobs reflected a 7,000 worker increase in construction employment, the firmest rise in three months. Nevertheless, y/y growth decelerated to 2.1% from 5.1% as of January. Manufacturing sector employment eased 2,000 which reversed August's gain. The 0.9% y/y gain compared to the July 2018 high of 2.3%. Mining & logging sector employment was unchanged both m/m and y/y. Annual growth is down from 9.1% this past October.

The 109,000 increase (1.6% y/y) in private service-producing employment was the slimmest in four months, and was half the increase in January. Education & health services jobs rose 40,000 (2.6% y/y) compared to a 56,000 increase during July. Professional & business services employment rose a reduced 34,000 (2.1% y/y), including a firm 10,200 increase (0.6% y/y) in temporary help jobs. Leisure & hospitality employment increased 21,000 (2.0% y/y), the strongest gain in six months. Information sector employment rose an improved 9,000 (0.8% y/y), but financial activity employment rose a reduced 3,000 (1.2% y/y). Employment in the trade, transportation & utilities category rose 5,000 (0.4% y/y) including an 11,400 decline (-0.4% y/y) in the number of retail jobs.

Government sector employment rose 22,000 (0.8% y/y) which was roughly half the rise in August. The number of federal government jobs declined 2,000 (+1.6% y/y). Census worker employment was unchanged. State government employment rose an improved 10,000 (0.4% y/y) and the number of local government jobs increased 14,000 (0.8% y/y).

A fairly stable level of average hourly earnings reflected a 0.1% decline (+3.0% y/y) in private service-producing pay. Information sector earnings declined 1.2% (+3.7% y/y) and reversed the August rise. Financial activities earnings also fell 0.2% (+3.1% y/y) following a 0.6% gain, but professional & business sector earnings gained 0.2% (3.2% y/y). Leisure & hospitality earnings rose 0.4% (3.7% y/y). Education & health sector pay fell 0.2% (+1.7% y/y). Factory sector earnings edged 0.1% higher (2.7% y/y) and construction earnings were little changed (2.2% y/y).

The length of the average workweek held steady at 34.4 hours. The mining sector workweek eased to 46.2 hours and factory hours held steady at 40.5 hours. The construction sector workweek jumped to 39.8 hours and the private service sector workweek held steady at 33.2 hours. Financial sector hours eased to 37.4 while the length of the professional & business sector workweek eased to 36.1 hours. Education & health sector hours slipped to 32.9 while leisure & hospitality hours remained unchanged at 25.9.

From the household survey of employment, the lower 3.5% unemployment rate and the gain in the labor force reflected a steady labor force participation rate of 63.2%. That was up from the September 2015 low of 62.4%. The teenage participation rate eased to 35.3% but for those aged 20-24, it improved to 72.5%. For workers aged 25-54, the rate was steady at the cycle high of 82.6%. For men in that age bracket, the rate was little changed at 89.1% and for women of that age, it also was fairly steady at 76.2%. For workers aged 55 & over, the rate was steady at 40.3%, but still was increased from 30% in 1995.

The teenage unemployment rate eased to 12.5% and the rate for workers aged 20-24 declined to 6.3%. For workers aged 25-54, the rate slipped to 3.0%. For those over 55, the jobless rate eased to 2.4%.

By education attainment, workers without a high school diploma were a record low 4.8% unemployed. High school graduates without a college degree were 3.6% unemployed and those with some college but no degree were 2.9% without work. College graduates were 2.0% unemployed.

The labor market data are contained in Haver's USECON database. Detailed figures are in the EMPL and LABOR databases. The expectations figures are in the AS1REPNA database.

Employment: (SA, M/M Change, 000s) Sep Aug Jul Sep Y/Y 2018 2017 2016
Payroll Employment 136 168 166 1.4% 1.7% 1.6% 1.8%
 Previous Estimate -- 130 159 -- -- -- --
  Manufacturing -2 2 4 0.9 2.0 0.7 0.1
  Construction 7 4 -3 2.1 4.6 3.6 4.1
  Private Service-Producing 109 121 126 1.6 1.7 1.8 2.2
  Government 22 46 44 0.8 0.4 0.6 0.9
Average Weekly Hours - Private Sector 34.4 34.4 34.3 34.5 34.5 34.4 34.4
Private Sector Average Hourly Earnings (%) -0.0 0.4 0.3 2.9 3.0 2.6 2.6
Unemployment Rate (%) 3.5 3.7 3.7 3.7 3.9 4.4 4.9
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