Sunday, October 7, 2012

Jobs, or no jobs?

Jobs, or no jobs? Reports show that the September unemployment rate plunged, unexpectedly, to 7.8%, from 8.1% in August. It was the first time it fell below 8% since January, 2009, the month that Obama took office. More important was the reason, it fell was because people were finding work in large numbers, and not because they were just leaving the labor force as in prior months. Claims that things are kicking up came as a surprise to many of us surveying things here on the ground, and recently witnessing a slowdown in manufacturing.

Non-farm payroll employment rose by 114,000, a very unremarkable number in itself but, the two prior months of July and August were revised up sharply, payrolls are now being shown to have rose a cumulative 86,000 more than first reported. That, however, is not the full story. The Bureau of Labor Statistics measures jobs two ways: the well-known payroll survey of employers, and the lesser-known survey of households, which yields the unemployment rate. Most the ruckus is being caused by the latter survey which shows the number of people with jobs skyrocketed by 873,000 in September from August. It must be noted that the household survey numbers are extremely volatile.

So whats the bottom line, how should we interpret these numbers? This is the largest gain since January, 2003, but remember January figures are often distorted by annual revisions, you have to go back to 1983 to find a monthly gain this big outside January.  Moreover, the gains in payroll employment, for a change, got a big hand from government; state and local jobs have climbed a relatively hefty 72,000 in the last three months. This does not add to the argument that all is well in the private sector. Many of these new jobs are low paying and often part time, it should also be noted that we saw a huge jump in the hiring of new workers without highschool diplomas, that is somewhat baffling. I remain unconvinced.

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