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Friday, November 06, 2015 9:38 AM

Strong Payroll Bounce +271,000; December Rate Hike Likely

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Initial Reaction

Following last month's downside shock, comes this month's big surprise to the upside. The Bloomberg Consensus estimate was 190,000 jobs and the headline total was 271,000. The unemployment rate declined to 5.0%, the lowest since April 2008. A rate hike in December is likely.

BLS Jobs Statistics at a Glance

  • Nonfarm Payroll: +271,000 - Establishment Survey
  • Employment: +320,000 - Household Survey
  • Unemployment: -7,000 - Household Survey
  • Involuntary Part-Time Work: -235,000 - Household Survey
  • Voluntary Part-Time Work: +198,000 - Household Survey
  • Baseline Unemployment Rate: -0.1 at 5.0% - Household Survey
  • U-6 unemployment: -0.2 to 9.8% - Household Survey
  • Civilian Non-institutional Population: +216,000
  • Civilian Labor Force: +313,000 - Household Survey
  • Not in Labor Force: -97,000 - Household Survey
  • Participation Rate: Unchanged at 62.4 - Household Survey (a 40-year low)

October 2015 Employment Report

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

Total nonfarm payroll employment increased by 271,000 in October, and the unemployment rate was essentially unchanged at 5.0 percent. Job gains occurred in professional and business services, health care, retail trade, food services and drinking places, and construction.

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 was unchanged at 34.5 hours. Average weekly hours of all private service-providing employees was unchanged at 33.4 hours.

Average hourly earnings of private workers rose $0.09 to $21.18. Average hourly earnings of private service-providing employees rose $0.08 to $20.98.

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 5.0%. 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 9.8%. 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.

Mike "Mish" Shedlock

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