The headline seasonally adjusted BLS job growth was well above expectations. The internals look good, and the pace of year-to-date growth exceeds last year. This was a strong report.
Analyst Opinion of the BLS Employment Situation
The household and establishment surveys both showed good growth – but the amount of growth was inconsistent. The year-to-date employment is running above the pace of last year. Last month’s employment gains were unchanged. The growth this month was significantly over expectations. Just considering this month’s data – it was better than last month.
Note this message from the BLS:
Hurricane Michael made landfall in the Florida Panhandle on October 10, 2018, during the reference periods for both the establishment and household surveys. Hurricane Michael had no discernible effect on the national employment and unemployment estimates for October, and response rates for the two surveys were within normal ranges.
The year-over-year rate of growth for employment insignificantly decelerated this month (blue bars on graph below). This is a year-over-year analysis which has no seasonality issues.
Economic intuitive sectors of employment were positive.
This month’s report internals (comparing household to establishment data sets) was moderately inconsistent with the household survey showing seasonally adjusted employment growing 600,000 vs the headline establishment number expanding 250,000. The point here is that part of the headlines are from the household survey (such as the unemployment rate) and part is from the establishment survey (job growth). From a survey control point of view – the common element is jobs growth – and if they do not match, your confidence in either survey is diminished. [note that the household survey includes ALL jobs growth, not just non-farm).
The household survey added 711,000 people to the labor force.
The National Federation of Independent Business (NFIB)’s monthly Jobs Report is at the end of this post.
A summary of the employment situation:
BLS reported: 250K (non-farm) and 246K (non-farm private). Unemployment rate was unchanged at 3.7 %.
ADP reported: 227K (non-farm private)
In Econintersect‘s October 2018 economic forecast released in late September, we estimated non-farm private payroll growth at 230,000 (based on economic potential) and 215,000 (fudged based on current overrun / under-run of economic potential).
The market expected (from Econoday):
| Seasonally Adjusted Data |
Consensus Range |
Consensus |
Actual |
| Nonfarm Payrolls – M/M change |
150,000 to 231,000 |
190,000 |
250,000 |
| Unemployment Rate – Level |
3.6 % to 3.8 % |
3.7 % |
3.7 % |
| Private Payrolls – M/M change |
160,000 to 200,000 |
181,000 |
246,000 |
| Manufacturing Payrolls – M/M change |
10,000 to 22,000 |
14,000 |
+32,000 |
| Participation Rate – level |
62.6 % to 62.8 % |
62.8 % |
62.9 % |
| Average Hourly Earnings – M/M change |
0.1 % to 0.4 % |
0.2 % |
+0.2 % |
| Average Hourly Earnings – Y/Y change |
2.8 % to 3.2 % |
3.1 % |
+3.1 % |
| Av Workweek – All Employees |
|
34.5 hrs |
34.5 hrs |
The BLS reports seasonally adjusted data – manipulated with multiple seasonal adjustment factors, and Econintersect believes the unadjusted data gives a clearer picture of the jobs situation.
Non-seasonally adjusted non-farm payrolls grew 614,000 – better than last year and better than most Octobers this century. The following chart compares the jobs gains this month with the same month historically:
