Hello and glad to be back with you! This is our first post since October 17, as the government shutdown and resultant lack of new economic data pushed us to pause this blog series. The shutdown is over, the flow of new data resumed today, and so we are back.
Today’s release of employment data covers the month of September. The data driving this release were solicited and collected before the shutdown but just released today. The Bureau of Labor Statistics (BLS) has announced that October data will not be released, but that November data will be announced on December 16.
What appears to be going on is that due to the shutdown, BLS was not online to solicit October data on employment and wages from employment establishments, and, further, its solicitations for November data have begun only in the last few days, once the shutdown was over. So, rather than releasing October data based on a smaller-than-usual sample of establishments, it will instead release November data later than usual next month, with “estimated” October data included in that release.
It is to be expected, then, that the October data released next month will be “hairier” than usual, which might also affect the size of the to-be-reported November job gains. That is, since the October level of employment will be more tentative than usual, the size of the change in jobs from October to November will also be tentative.
A possibly offsetting effect is that today’s first release of September jobs data is more final than usual, since the BLS was able to incorporate both the initial responses submitted in late-September and the subsequent submissions coming in late-October (that would normally be used to revise the “initial” September estimates). Sorry if this is getting complicated/wonky, but shutdowns are complicated.
In any case, the 97,000 gain in private-sector payroll jobs announced today is way above the Street estimates circulating early last month (and far above the gain suggested by the ADP survey for September released last month). Granted, a 97,000 job gain is not extraordinary, but it is, again, substantially stronger than what the markets were expecting.
That take is partly offset by the fact that the August private-sector payroll jobs estimate was revised down by 41,000. Similarly, it continued to be the case in September that most of the job creation was in the health care and social assistance sectors, both of which are heavily dependent on government outlays and less so on private-sector economic activity. Still, as you can see in Exhibit 1, the rest of the private-sector economy—that is, the portion outside health and social—did report a nice gain in jobs in September, the first such gain since May.
Other market-friendly aspects of the report were that 1) most of the job gains were for production workers, rather than bosses and 2) gains in average wages were below the 3.5% annualized rate that the Federal Reserve considers to be consistent with its 2% inflation target.
Total payroll job gains were 119,000 in September, reflecting a 22,000 reported increase in government jobs. No, government agencies were not on a hiring spree prior to the shutdown. Rather, this gain occurred predominantly in public-school jobs and reflected the fact that many schools ended their summer breaks later than usual. In other words, the reported government job gain is a seasonal blip.
All in all, then, today’s jobs report was hardly a barnburner, but it did beat the modest market expectations, and it should, for now, blunt the recession fears that various folks have circulated. It is good to be back in the saddle with you, and we will return next Wednesday with comments on the initial release of 3Q GDP.