The US economy continues to add jobs, and October’s establishment survey showed a solid increase of 171,000, with upward revisions to August (to +192,000 from +142,000) and September (to +148,000 from +114,000). The unemployment rate in the household survey, however, which went down markedly to 7.8% in September, ticked up to 7.9% in October. The Bureau of Labor Statistics described this as “essentially unchanged,” so it’s more like a rounding error than an actual increase in the rate.
The BLS made sure to note that Hurricane Sandy did not affect the survey, though I would imagine it will impact future revisions in October:
Hurricane Sandy had no discernable effect on the employment and unemployment data for October. Household survey data collection was completed before the storm, and establishment survey data collection rates were within normal ranges nationally and for the affected areas.
Small increases in the labor force participation rate and the employment-population ratio can account for the small increase in the topline unemployment rate. The EPOP, at 58.8%, is up year-over-year, though the labor force participation rate (63.8%) is still down. The number of unemployed persons in the household survey increased to 12.258 million after a sharp decrease in the previous month’s survey. But total employment rose by 470,000. This accounts for the lack of major change on that topline rate.
Long-term unemployment remains a problem, accounting for 40.6% of the unemployed. The BLS defines long-term unemployment as over 27 weeks. They do not count those who dropped out of the labor force; 2.4 million are described as “marginally attached to the labor force” and not counted in the long-term unemployed. Part-time employment decreased, possibly suggesting that many of them were converted to full-time work.
The establishment survey’s increase of 171,000 jobs in October is above the average of 157,000 for 2012. These numbers show modest but unspectacular job growth, ensuring that the unemployment rate will remain elevated for the near future. Professional and business services did the best among professions (+51,000), while health care continued its run with an increase of 31,000 jobs. Retail trade and hospitality – service sector jobs – grew as well. Manufacturing was up 13,000 and construction up 17,000. The public sector showed a loss of 13,000 jobs, stubbornly continuing its role as a drag on employment. If budget cuts from the sequester go through, that trend will only accelerate.
The average workweek hours for all employees remained unchanged, and the manufacturing workweek actually fell. Hourly earnings were down by 1 cent. This is a very ominous spot of the report.
Overall, the report shows modest growth in jobs, with the economy bumping along. The major headwinds are all at the foot of Congress and the fiscal slope. It’s their decision whether or not to pull the economy back into recession.