Employment Situation: Hurricane Masks Another Solid Report

October 5, 2018
Bottom Line: September saw below average job growth with net declines in the retail and leisure and hospitality sectors, likely impacted by the hurricane in the mid-Atlantic. There were strong revisions to August and July data, though, as both private and government sector jobs were revised higher. Average hourly earnings were in-line with expectations and revised a touch lower in prior months -- but we are still seeing a modest acceleration there with 3-month annualized gains of 3.8% vs. 2.8% over the last 12 months and 2.6% in 2017. That said, we are not seeing that confirmed in average weekly earnings, where 3-month annualized gains are still just in-line with 2018's gains at 2.6%. Finally, the household jobs survey showed strong gains of 420k, pushing the unemployment rate down to 3.7% with the labor-force participation rate unchanged at 62.7%. Overall, adjusted for the hurricane impact this was another solid report, mostly in-line with those of the last few months. Payroll Employment rose by 134k in September, compared with market expectations for an increase of 185k. The prior 2 months were revised, higher in August by 69k and higher in July by 18k. Government jobs ROSE by 13k. Consequently, private sector jobs ROSE by 121k. Private education jobs fell by 12k. State and Local education jobs rose by 20k. Overall employment is now 1.7% ABOVE its year ago level, Over the past 12 months, 2,537k jobs have been created. In September, the job gains were in:
  • Trade, Transportation & Utilities (+28k with -20k of those in Retail Trade),
  • Professional & Business Services (+54k with the addition of 10.6k in Temp Help Services),
  • Education & Health Services (+30k),
  • Construction (+23k),
  • Manufacturing (+18k), and
  • Financial Activities (+13k)
  • Jobs were shed in Other Services (-1k), and Leisure & Hospitality (-17k).
The Unemployment Rate FELL by 0.2 percentage points in September to 3.7%, compared with market expectations for a small decline to 3.8%. Household employment rose by 420k while the labor force increased by 150k, resulting in a decrease in the number of unemployed of 270k. The Labor Force Participation Rate was UNCHANGED at 62.7%. The Employment-Population Ratio ROSE by 0.1 percentage points to 60.4%. The number of people Working Part-Time for Economic Reasons ROSE by 236k to 4,547k. while Long-Term Unemployment ROSE by 52k to 1,384k (accounting for 23.2% of the unemployed), while the Mean Duration of Unemployment ROSE by 1.4 weeks to 24.0 weeks. There are now 6.0 million people officially unemployed. In addition, there are another 5,237k people who say they want a job but are not currently looking for one. Finally, another 4,547k people are working part-time because of slack economic conditions. Hourly Earnings ROSE by 0.3% in September, in-line with market expectations of 0.3%. Hourly earnings are now 2.8% ABOVE their year ago level. Weekly Earnings also ROSE by 0.3%, the result of the change in hourly earnings and a steady workweek. Weekly earnings are now 3.4% ABOVE their year ago level. The Average Workweek was UNCHANGED at 34.5 hours, in line the market consensus at 34.5 hours.