U.S. Payrolls Rise Despite GM Strike; Wages & Jobless Rate Increase

Job growth moderated during October, but a strike at GM and a hefty drop in temporary Census workers accounted for much of the slowdown. Nonfarm payrolls increased 128,000 (1.4% y/y) during October following a 180,000 September gain, revised from 136,000. August's increase also was strengthened to 219,000 from 168,000. A 100,000 October increase had been expected in the Action Economics Forecast Survey. So far this year, payrolls overall have risen an average 167,000 per month after a 223,000 monthly average in 2018.

Average hourly earnings in the private sector increased 0.2% in October following no change during the prior month. A 0.3% rise had been expected. Growth during the last twelve months of 3.0% remained below the recent y/y peak of 3.4% logged in February.

The unemployment rate rose to an expected 3.6% after falling in September to 3.5%. Employment in the household survey rose 241,000 (1.2% y/y) and the labor force increased 325,000 (1.0% y/y). The overall jobless rate, including those who were marginally attached or working part-time for economic reasons, rose slightly to 7.0% from September's reading which was near the lowest level since December 2000.

From the payroll employment survey, the 128,000 job gain reflected two significant events, roughly 40,000 fewer workers due to the GM strike and 20,000 fewer Census workers. Elsewhere job gains were fairly steady. Construction sector employment rose 10,000 after an 11,000 September rise. Growth y/y has decelerated significantly to 1.9% from 5.1% as of January. Mining & logging sector employment held steady (-0.5% y/y) following a 1,000 increase.

In the private service sector, payroll growth has been fairly steady near October's 157,000 for three months. That's up from the 112,000 three-month gain as of July. The number of jobs in leisure & hospitality strengthened 61,000 (2.3% y/y), the largest rise in nine months. Employment in the trade, transportation & utility sector rose 26,000 (0.5% y/y) after a 19,000 September rise, and little change from January through August. Financial activities employment rose an improved 16,000 (1.3% y/y). Offsetting these improvements, the number of education & health services jobs grew a lessened 39,000 (2.7% y/y) and professional & business services employment rose a weaker 22,000 (1.9% y/y). Employment in the information services sector fell 4,000 (-0.3% y/y), down for the third month in the last four.

Government sector employment eased 3,000 (+0.7% y/y) as federal government hiring declined 17,000 (+1.0% y/y). State government payrolls improved 3,000 (-0.0% y/y) and local government jobs were 11,000 higher (1.0% y/y).

Average hourly earnings in the private sector rose 0.2% following no change in September. The 3.0% y/y increase remained below February's 3.4% peak. Construction sector earnings rose 0.4% and 2.4% y/y. Factory sector earnings ticked 0.1% higher, but the 2.9% y/y increase was improved from 1.3% in July of last year. Professional business service sector pay strengthened 0.4% and by an improved 3.4% y/y. Information sector earnings also rose 0.4% (3.8% y/y) but that followed a 1.2% decline. Financial activities earnings rose 0.4% (3.6% y/y). Showing lesser increases were earnings in education & health services which rose 0.1%. The 1.7% y/y gain was half the y/y growth logged one year ago. Leisure & hospitality wages also edged 0.1% higher, and by a decelerated 3.4% y/y.

The length of the private sector average workweek held steady at 34.4 hours. Mining & logging sector hours improved to 46.4 hours but construction hours fell to 39.3. The length of the factory sector workweek fell to 40.3 hours, the fewest since September 2011 and down from the high of 41.0 hours in Q3'18. The financial activities workweek rose to 37.6 hours and professional & business services hours edged higher to 36.2. Education & health sector hours maintained its 12-year high of 33.0, while trade, transportation & utilities hours remained at 34.2. Leisure & hospitality hours fell to 25.8, down from a 26.2 high during 2015.

 From the household survey of employment, the higher 3.6% unemployment rate and the strong gain in the labor force reflected a strengthened labor force participation rate of 63.3%. That was up from the September 2015 low of 62.4%. The teenage participation rate increased to 35.6% and for those aged 20-24, it improved to 72.8%. For workers aged 25-54, the rate rose to a cycle high of 82.8%. For men in that age bracket, the rate was unchanged at 89.1%. For women of that age, it jumped to 76.6%, the highest level since March 2001, up from 73.7% during all of 2015. For workers aged 55 & over, the participation rate was steady m/m at 40.3%, but still was increased from 30% in 1995. The employment/population ratio held steady at 61.0%.

The teenage unemployment rate eased to 12.3% and the rate for workers aged 20-24 slipped to 6.2%. For workers aged 25-54, the rate held steady at 3.0%. For those over 55, the jobless rate edged up to 2.6%.

By education attainment, unemployment of workers without a high school diploma jumped to 5.6% from the record low of 4.8% in September. High school graduates without a college degree were 3.7% unemployed and those with some college but no degree were 2.9% without work. College graduates were 2.1% 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.

The United States, Japan and the Global Economy from Fed Vice Chair Richard H. Clarida can be found here.