Payroll Disaster: Establishment Survey +142K Jobs, Employment -236K; Labor Force -350K; 59K Downward Revisions

Initial Reaction

This report was a veritable disaster.  Although the establishment survey sported 142,000 jobs it was much weaker than expected. Downward revisions for the last two months totaled 59,000.

The labor force fell by 350,000 driving the participation rate to a 40-year low. Government jobs rose 24,000 so private payrolls accounted for a mere 118,000 jobs. Weekly hours ticked down by 0.1 hours.

Topping off the disastrous set of numbers, employment declined by 236,000.

Consensus Estimates

The Bloomberg Consensus estimate was 203,000 jobs total with 195,000 private sector jobs. The actual numbers were well outside of any economist's estimate. The lowest estimate for total jobs was 180,000. The lowest total for private jobs was 175,000. The latter missed by 57,000 jobs!

Revisions

Last month I noted, the preceding two months were revised up by 44,000. It seems something went wrong.

The change in total nonfarm payroll employment for July was revised from +245,000 to +223,000, and the change for August was revised from +173,000 to +136,000. With those revisions, employment gains in July and August combined were 59,000 less than previously reported.

BLS Jobs Statistics at a Glance

• Nonfarm Payroll: +142,000 - Establishment Survey
• Employment: -236,000 - Household Survey
• Unemployment: -114,000 - Household Survey
• Involuntary Part-Time Work: -447,000 - Household Survey
• Voluntary Part-Time Work: +211,000 - Household Survey
• Baseline Unemployment Rate: +0.0 at 5.1% - Household Survey
• U-6 unemployment: -0.3 to 10.0% - Household Survey
• Civilian Non-institutional Population: +229,000
• Civilian Labor Force: -350,000 - Household Survey
• Not in Labor Force: +579,000 - Household Survey
• Participation Rate: -0.2 to 62.4 - Household Survey (a 40-year low)

September 2015 Employment Report

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

Total nonfarm payroll employment increased by 142,000 in September, and the unemployment rate was unchanged at 5.1 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in health care and information, while mining employment fell.

Unemployment Rate - Seasonally Adjusted



Nonfarm Employment



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Nonfarm Employment Change from Previous Month by Job Type



Hours and Wages

Average weekly hours of all private employees fell by 0.1 hours to 34.5 hours. Average weekly hours of all private service-providing employees was flat at 33.4 hours.

Average hourly earnings of production and non-supervisory private workers was flat at $21.08. Average hourly earnings of production and non-supervisory private service-providing employees rose $0.01 to $20.90.

For discussion of income distribution, please see What's "Really" Behind Gross Inequalities In Income Distribution?

Birth Death Model

Starting January 2014, I dropped the Birth/Death Model charts from this report. For those who follow the numbers, I retain this caution: Do not subtract the reported Birth-Death number from the reported headline number. That approach is statistically invalid. Should anything interesting arise in the Birth/Death numbers, I will add the charts back.

Table 15 BLS Alternate Measures of Unemployment



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Table A-15 is where one can find a better approximation of what the unemployment rate really is.

Notice I said "better" approximation not to be confused with "good" approximation.

The official unemployment rate is 5.1%. However, if you start counting all the people who want a job but gave up, all the people with part-time jobs that want a full-time job, all the people who dropped off the unemployment rolls because their unemployment benefits ran out, etc., you get a closer picture of what the unemployment rate is. That number is in the last row labeled U-6.

U-6 is much higher at 10.0%. Both numbers would be way higher still, were it not for millions dropping out of the labor force over the past few years.

Some of those dropping out of the labor force retired because they wanted to retire. The rest is disability fraud, forced retirement, discouraged workers, and kids moving back home because they cannot find a job.

Rate Hikes

By the way, forget about rate hikes.

Mike "Mish" Shedlock