Initial Reaction

The payroll survey shows a net gain of 214,000 jobs vs. an expectation of 240,000 jobs. Last month was revised up from 248,000 to 256,000.

The labor force rose by a solid 416,000.

The unemployment rate fell by 0.1% on the basis of increased employment (+683,000) instead of the more typical reason that people dropped out of the labor force. Swings in employment and the labor force have been wild lately.

All things considered, this was a pretty strong report.

The one drawback is where the job gains came from. 52,000 of those jobs came in the leisure and hospitality category. Of them, 42,000 were in food and drinking services. These are typically low-pay if not minimum wage jobs.

BLS Jobs Statistics at a Glance

  • Nonfarm Payroll: +214,000 – Establishment Survey
  • Employment: +683,000 – Household Survey
  • Unemployment: -267,000 – Household Survey
  • Involuntary Part-Time Work: -76,000 – Household Survey
  • Voluntary Part-Time Work: +208,000 – Household Survey
  • Baseline Unemployment Rate: -0.1 at 5.8% – Household Survey
  • U-6 unemployment: -0.3 to 11.5% – Household Survey
  • Civilian Non-institutional Population: +211,000
  • Civilian Labor Force: +416,000 – Household Survey
  • Not in Labor Force: -206,000 – Household Survey
  • Participation Rate: +0.1 at 62.8 – Household Survey

October 2014 Employment Report

Please consider the Bureau of Labor Statistics (BLS) October2014 Employment Report.

Total nonfarm payroll employment rose by 214,000 in October, and the unemployment rate edged down to 5.8 percent, the U.S. Bureau of Labor Statistics reported today. Employment increased in food services and drinking places, retail trade, and health care.

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Unemployment Rate – Seasonally Adjusted

Nonfarm Employment January 2003 – October 2014

Nonfarm Employment Change from Previous Month by Job Type

Hours and Wages

Average weekly hours of all private employees rose by 0.1 hours to 34.6 hours. Last month I said the same thing, but a correction now puts last month at 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 rose $0.04 to $20.70. Average hourly earnings of production and non-supervisory private service-providing employees also rose $0.04 to $20.49.

For the second consecutive month, the prior month’s hourly earnings (both figures) were revised lower by by $0.01.

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 5.8%. 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 11.5.0%. Both numbers would be way higher still, were it not for millions dropping out of the labor force over the past few years.

Mike “Mish” Shedlock