Putting the Employment Report in Perspective

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Initial Reaction and Election Impact

The establishment report of +114,000 jobs was pretty much about what most expected. The four-month average is a mere 120,000 a month (a very weak set of establishment numbers for this point in a recovery).

However, the household survey surprise shows the unemployment rate fell three-tenths of a percent to 7.8%.

On the surface, this is a solid showing, and 100% certain to boost the Obama campaign. I suggest these numbers will overshadow a horrendously weak performance by the president in the debate.

That said, a closer look shows the entire drop in the unemployment rate can be attributed to a surprise rise of 582,000 in part-time workers. U-6 unemployment remained at 14.7%. U-6 includes part-time workers who want a full-time job.

Still, all things considered, this was the strongest report in four months.

Does it change my recession outlook?

No, it doesn't. A one-month potential outlier based primarily on a rise in part-time employment, accompanied by other weak data does not change my perception.

Jobs Report at a Glance

Here is an overview of today's release.

  • September Payrolls +114,000 - Establishment Survey
  • Four-month average +120,000 - Establishment Survey
  • US Employment +873,000 - Household Survey
  • Involuntary Part-Time Work +582,000 - Household Survey
  • Baseline Unemployment Rate -.03 at 7.8% - Household Survey
  • U-6 unemployment did not drop. It remained at 14.7%.
  • The Civilian Labor Force +418,000

Recall that the unemployment rate varies in accordance with the Household Survey not the reported headline jobs number, and not in accordance with the weekly claims data.

Quick Notes About the Unemployment Rate

  • US unemployment rate -.3 to 7.8%
  • In the last two months the unemployment rate dropped .5%
  • Reversing a three-month trend, those "not" in the labor force fell by 211,000
  • In the last year, those "not" in the labor force rose by 2,643,000
  • Over the course of the last year, the number of people employed rose by 2,867,000. 
  • Participation Rate rose .01 to 63.6%
  • Long-Term unemployment (27 weeks and over) was 4,844 million a decline of 189,000
  • Were it not for people dropping out of the labor force, the unemployment rate would be well over 10%.

Over the past several years people have dropped out of the labor force at an astounding, almost unbelievable rate, holding the unemployment rate artificially low. Some of this was due to major revisions last month on account of the 2010 census finally factored in. However, most of it is simply economic weakness.

September 2012 Jobs Report

Please consider the Bureau of Labor Statistics (BLS) September 2012 Employment Report.

The unemployment rate decreased to 7.8 percent in September, and total nonfarm payroll employment rose by 114,000, the U.S. Bureau of Labor Statistics reported today. Employment increased in health care and in transportation and warehousing but changed little in most other major industries.

Unemployment Rate - Seasonally Adjusted
unemployment rate seasonally adjusted 2010 to 2012

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