Nonfarm Payrolls Rise A Mere 12,000 With Government Jobs Up 40,000 -

Nonfarm Payrolls Rise A Mere 12,000 With Government Jobs Up 40,000

Nov 01, 2024Jeremy ParkinsonFinance0

Data from the BLS, chart by MishHurricane Milton and HeleneThe BLS Employment Report offers this Hurricane Explanation for the grim report.

Hurricane Helene made landfall on Florida’s Gulf Coast on September 26, 2024, and then tracked north into several other states. This was before the October reference periods for both the household and establishment surveys. Hurricane Milton struck Florida on October 9, 2024, during the reference periods for both surveys. Prior to the storm’s landfall, there were large-scale evacuations of Florida residents.

In October, the household survey was conducted largely according to standard procedures, and response rates were within normal ranges. The initial establishment survey collection rate for October was well below average. However, collection rates were similar in storm-affected areas and unaffected areas.

A larger influence on the October collection rate for establishment data was the timing and length of the collection period. This period, which can range from 10 to 16 days, lasted 10 days in October and was completed several days before the end of the month. No changes were made to either the establishment or household survey estimation procedures for the October data.

It is likely that payroll employment estimates in some industries were affected by the hurricanes; however, it is not possible to quantify the net effect on the over-the-month change in national employment, hours, or earnings estimates because the establishment survey is not designed to isolate effects from extreme weather events.

There was no discernible effect on the national unemployment rate from the household survey.

Jobs vs EmploymentFrom September 2020 through early 2022, nonfarm payroll job gains and full time employment changes tracked together.Starting around March of 2022, a divergence between employment and jobs became very noticeable, and I have been discussing the divergence since then.Job Stats vs One Year Ago

Nonfarm Payrolls: +2,173,000

Employment: +216,000

Full Time Employment: -1,000,600

Job Stats vs Two Years Ago

Nonfarm Payrolls: +5,108,000

Employment: +2,767,000

Full Time Employment: +1,282,000

In the last year, nonfarm payrolls are up by 2.4 million while employment is only up by 216,000 and full-time employment is down by over one million.Job Report Details

Nonfarm Payroll: +12,000 to 159,105,000 – Establishment Survey

Civilian Non-institutional Population: +209,000 to 269,289,000

Civilian Labor Force: -220,000 to 168,479,000 – Household Survey

Participation Rate: -0.1 to 62.6% – Household Survey

Employment: -368,000 to 161,496,000 – Household Survey

Unemployment: +150,000 to 6,984,000- Household Survey

Baseline Unemployment Rate: +0.0 to 4.1% – Household Survey

Not in Labor Force: 428,000 to 100,809 – Household Survey

U-6 unemployment: +0.0 to 7.7% – Household Survey

Nonfarm Payroll Change by Sector Key Points

Government and Health Services are related to the surge of illegal immigrants and the need to address them.

Professional and Business Services Employment in temporary help services declined by 49,000 in October. Since reaching a peak in March 2022, temporary help services has lost 577,000 jobs.

Manufacturing Employment in manufacturing decreased by 46,000 in October, reflecting a decline of 44,000 in transportation equipment manufacturing that was largely due to strike activity.

Monthly Change in Nonfarm PayrollsMonthly Revisions

The change in total nonfarm payroll employment for August was revised down by 81,000, from +159,000 to +78,000.

The change for September was revised down by 31,000, from +254,000 to +223,000.

With these revisions, employment in August and September combined is 112,000 lower than previously reported.

Nearly every month there are negative revisions. These are huge revisions and hurricanes did not have an impact.Part-Time Jobs

Involuntary Part-Time Work: -67,000 to 4,557,000

Voluntary Part-Time Work: -214,000 to 22,352,000

Total Full-Time Work: -164,000 to 133,496,000

Total Part-Time Work: -227,000 to 27,934,000

Multiple Job Holders: -354,000 to 8,305,000

The above numbers never total correctly due to the way the BLS makes seasonal adjustments. I list them as reported.It’s important to not that multiple job holders add to nonfarm payrolls but not the number of employed.Hours and WagesThis data is frequently revised.

Average weekly hours of all private employees was flat at 34.3 hours.

Average weekly hours of all private service-providing employees was flat at 33.2 hours.

Average weekly hours of manufacturers fell 0.1 hour to 39.9 hours.

An overall decline or rise of a tenth of an hour does not sound line much, but with employment over 160 million, it’s more significant than it appears at first glance.Hourly EarningsThis data is also frequently revised. Here are the numbers as reported this month.Average Hourly Earnings of All Nonfarm Workers rose $0.13 to $35.46. A year ago the average wage was $34.10. That’s a gain of 4.0%.Average hourly earnings of Production and Nonsupervisory Workers rose $0.12 to $30.48. A year ago the average wage was $29.29. That’s a gain of 4.1%.Year-over-year wages are keeping up with year-over-year inflation after underperforming for many months.Unemployment RateThe unemployment rate hit a 50-year low in January and April of 2023 at 3.4 percent. It’s now 4.1 percent.“The unemployment rate has bottomed this cycle and will generally head higher.”I first made that comment many months ago. If there was any doubt, it’s now erased.Alternative Measures of UnemploymentTable A-15 is where one can find a better approximation of what the unemployment rate really is.

The official unemployment rate is 4.1 percent.

U-6 is much higher at 7.7 percent.

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. Some dropped out over Covid fears and never returned. Still others took advantage of a strong stock market and retired early.The rest is disability fraud, forced retirement (need for Social Security income), and discouraged workers.Birth Death ModelStarting January 2014, I dropped the Birth/Death Model charts from this report.The birth-death model pertains to the birth and death of corporations not individuals except by implication.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.Birth-Death Methodology ExplainedI gave a detailed explanation of the model and why the hype is wrong in my June 8, 2024 post How Much Did the BLS Birth-Death Adjustment Pad the May Jobs Report?I repeat, do not subtract the birth-death number from the headline number. That’s flawed.However, it is now clear that the BLS is too optimistic about the number of jobs they believe are being created by the net creation of new businesses.A Breakdown, by Sector, of the Negative 818,000 BLS Job RevisionsOn August 22, 2024 I gave A Breakdown, by Sector, of the Negative 818,000 BLS Job RevisionsThose negative revisions are a direct result of the BLS Birth-Death model gone haywire.Household Survey vs. Payroll Survey

The payroll survey (sometimes called the establishment survey) is the headline jobs number. It is based on employer reporting.

The household survey is a phone survey conducted by the BLS. It measures employment, unemployment and other factors.

If you work one hour, you are employed. If you don’t have a job and fail to look for one, you are not considered unemployed, rather, you drop out of the labor force.Looking for job openings on Jooble or Monster or in the want ads does not count as “looking for a job”. You need an actual interview or send out a resume.These distortions artificially lower the unemployment rate, artificially boost full-time employment, and artificially increase the payroll jobs report every month.Final ThoughtsThis was a dismal report.Some of it can be blamed on the Boeing strike and the hurricanes. The negative 81,000 revision to August can’t be blamed on hurricanes.The household survey which sets the unemployment rate did not seem to be impacted by the hurricanes.I remain highly skeptical of the glowing report last month (some of which has been revised away), and BLS monthly reports in general.The reports smack of oversampling large employers and undersampling small employers where jobs have been trending lower.Full time employment is down by more than a million from a year ago. Don’t pin that on hurricanes and do expect more negative revisions.More By This Author:Real Spending Rises 0.4 Percent, Real Disposable Income Up 0.1 PercentReal GDP Increased 2.8 Percent In The Advance 2024 Q3 EstimateThe Final GDPNow Forecast For 2024 Q3 Is 2.8 Percent.