Solid Job Growth in November

— by Jason Furman, chairman of the Council of Economic Advisers

With solid job growth in November — in addition to strong data on manufacturing activity and auto sales — it is clear that the recovery continues to gain traction.

Today’s report was yet another reminder of the resilience of America’s private sector following the disruptive government shutdown and debt limit brinkmanship in the first half of October.

Nevertheless, today’s jobs numbers show that too many Americans who have been unemployed for 27 weeks or longer are still struggling to find jobs.

That is why the President is calling on Congress to pass the extension of emergency unemployment insurance before it expires at the end of the year, just like they have always done when long-term unemployment remains elevated.

The President also continues to work to increase overall growth while ensuring that growth is shared broadly in the form of higher wages and more mobility, which is why he is fighting for a minimum wage increase and expansion of educational opportunities.

Five key points in today’s report after the jump.
1. America’s resilient businesses have added jobs for 45 consecutive months, with private sector employment increasing by more than 8 million over that period.

Today, we learned that total non-farm payroll employment rose by 203,000 in November, with 196,000 of that increase in the private sector. Private sector job growth was revised up for September (to 168,000) and October (to 214,000) so that over the last three months, private employment has risen by an average of 193,000 per month.

2. Real average hourly earnings for private production and non-supervisory workers rose 1.4% in the twelve months ending in October, the largest increase since 2009, and today’s data on nominal wages in November suggest that this growth likely continued.

These data signal that the recovery in the labor market continues to progress, but are also a reminder that more work remains to boost not only job creation but also earnings.

The real wage growth observed in recent months reflects both low inflation and a pickup in nominal wage growth, which continued into November, when the average private sector production and nonsupervisory worker earned $20.31 per hour, up 2.2% relative to a year earlier (data on inflation and real wages in November will be available on December 17).

Looking over a longer period, real average hourly earnings for production and nonsupervisory workers have risen on net only about 3% since 1979 — a period when labor productivity rose by more than 90%.

These statistics underscore the importance of taking steps to ensure that even as our overall economy continues to strengthen, those striving to get into the middle class are not left behind.

3. While many retailers add additional workers to accommodate heightened customer traffic during the holiday season, the magnitude of holiday hiring differs substantially across retail subsectors.

The chart on the right shows the varying extent of seasonal hiring by comparing the raw, unadjusted level of payroll employment in a given sector to the seasonally adjusted level. Sectors with higher ratios can be said to exhibit a more pronounced seasonal hiring pattern.

In November, the overall retail trade industry had 15,773,100 payroll positions (not seasonally adjusted), which represents 15,320,500 positions on a seasonally adjusted basis — the unadjusted level is about 3% higher than the adjusted level.

For clothing and clothing accessory stores, the sector with the most pronounced holiday hiring effect, unadjusted employment was about 10% higher than the seasonally adjusted level in November.

In contrast, for building material and garden supply stores, unadjusted employment was about 2% less than seasonally adjusted employment in November — perhaps unsurprising, since cold weather prevents Americans in many parts of the country from gardening during the winter months.

While the unadjusted data can provide interesting insights into the patterns of our economy and society, the seasonally adjusted data are the best benchmark of the economy’s progress.

And crucially, the seasonally adjusted data show that overall hiring in the retail trade sector has been solid in recent months, with employment rising by an average of 36,000 per month over the last six months.

4. While still unacceptably high, the unemployment rate fell 0.3% to 7.0%, the lowest in five years, and the Bureau of Labor Statistics’ broadest alternative measure of labor underutilization also posted a notable decline.

The “U-6” rate is the broadest alternative measure of labor underutilization because it includes the unemployed, persons working part-time for economic reasons, and those marginally attached to the labor force.

This measure fell by 0.6% in November, the largest one-month drop on record (following a shutdown-related increase in October), and also reached its lowest level in five years.

The concurrent improvement in the broadest official alternative measure of labor underutilization is another signal that the labor market is healing.

The chart above shows that over time, these two series tend to move in the same direction, but that the U-6 is always substantially higher than the official unemployment rate in both recessions and recoveries.

5. All of the reduction in unemployment in November was due to a drop in the number of short-term unemployed, while the average duration of unemployment rose to 37.2 weeks and remains markedly elevated.

The median duration of unemployment has come down from its peak of 24.8 weeks to 17.0 weeks in November, but the average duration has not come down as much from its peak of 40.7 weeks.

The substantial gap between the average and median duration of unemployment suggests that many of the remaining unemployed are concentrated at extremely lengthy durations of unemployment.

The additional weeks of unemployment insurance offered as a result of the Emergency Unemployment Compensation (EUC) program first signed into law by President Bush in 2008 serve as an important lifeline to those who are still struggling to get back on their feet in the wake of the crisis.

The critical need to extend the EUC program before it expires at the end of this year is outlined in this report, released earlier this week by the Council of Economic Advisers and the Department of Labor.

As the Administration stresses every month, the monthly employment and unemployment figures can be volatile, and payroll employment estimates can be subject to substantial revision. Therefore, it is important not to read too much into any one monthly report and it is informative to consider each report in the context of other data that are becoming available.

Private Sector Employment Rise for 43rd Consecutive Month

The Employment Situation in September

— by Jason Furman, Chairman of the Council of Economic Advisors

While job growth remained solid in September, there is no question that the focus of policy should be on how to achieve a faster pace of job growth by increasing certainty and investing in jobs, rather than the self-inflicted wounds of the past several weeks that increased uncertainty and inhibited job growth. Today’s delayed report describes the economy more than a month ago. More recent indicators suggest the labor market worsened in the month of October.

5 key points follow the jump.
1. Private sector employment has risen for 43 consecutive months, with businesses adding a total of 7.6 million jobs over that period.

Today we learned that total non-farm payroll employment rose by 148,000 in September, with the private sector accounting for 126,000 of that gain. Private sector job growth was revised down for July (to 100,000) but up for August (to 161,000).  In sum, private sector employment rose by an average of 129,000 per month in the third quarter, lower than we can be fully satisfied with, partially reflecting the effects of fiscal contraction. This underscores the continued importance of taking steps that speed the recovery and boost job creation, while avoiding self-inflicted wounds like a government shutdown and debt ceiling brinksmanship that have the opposite effect.

2. Weekly employment indicators not in today’s report suggest that the labor market situation deteriorated in early October, coinciding with the shutdown and the threat of a possible default.

Today’s employment report provides a snapshot of the economy in September, prior to the shutdown and debt limit brinksmanship. To understand more recent labor market developments we need to rely on other data that gives an initial indication of economic developments in October, including initial unemployment insurance claims and the Gallup Job Creation Index. Prior to the shutdown the four-week moving average of claims fell to 305,000, the lowest level since May 2007. But initial claims spiked in the first two weeks of October and reached their highest level since March (note the claims data do not include Federal employees). Although the precise cause of changes in the number of initial claims can be difficult to discern, the uptick in claims was corroborated by a similar movement in Gallup’s Job Creation Index, which is based on a weekly survey of approximately 4,000 workers. The Gallup index represents the net percentage of respondents who say their employers are adding workers, and has tracked unemployment insurance claims in the past. Both indicators suggest that the shutdown and debt ceiling brinksmanship in the first half of October had a disruptive effect on the labor market. During the shutdown, hundreds of thousands of Federal workers went unpaid, families were unable to travel to national parks, oil and gas drilling permits were delayed, Small Business Administration loans were put on hold, licenses to export high-tech products could not be granted, and documentation required to get a mortgage could not be accessed, to name just a few effects.

3. Local government educational services employment rose by 9,500 in September and is up 56,400 over the last three months – but remains well below pre-crisis levels.

While local education jobs appear to have stabilized and even started increasing in recent months, there is much further to go. Employment in this sector remains 291,700 below its previous peak in July 2008-and given a growing student population this understates the teacher and education jobs gap. It is worth noting that local government educational services employment began to decline around the same time that support from the Recovery Act peaked and began to phase out, and the Administration continues to support proposals to boost the hiring of teachers and other local government workers that play a critical role in communities across the country.

4. The unemployment rate for women ticked down to 6.7 percent in September, the lowest since December 2008 but still above pre-crisis rates.

Industries that employ a larger fraction of men (for example, construction and manufacturing) were particularly hard hit the recession, so the unemployment rate for men rose much more rapidly than the unemployment rate for women. This pattern has been fairly typical of recent recessions. During the recovery, the unemployment rate for men fell more rapidly and the two unemployment rates converged. However, in the last six months the two rates have diverged and the unemployment rate for women has fallen more rapidly to 6.7 percent while the male unemployment rate has come down more slowly and is 7.7 percent.

5. The economy has been adding jobs at a pace of more than 2 million per year.

Over the twelve months ending September 2013, total non-farm payroll employment rose by 2.2 million, similar to the gain in the year-earlier period. While the month-to-month figures can be volatile, the year-over-year changes indicate that the recovery has been durable in the face of several headwinds that have emerged in recent years. The separate household survey is more volatile month-to-month, but over a longer period, it tells the same story. When adjusted by the Bureau of Labor Statistics to be comparable to the concept of employment used in the payroll measure, household employment has risen by 1.9 million over the twelve months ending September 2013.  

As the Administration stresses every month, the monthly employment and unemployment figures can be volatile, and payroll employment estimates can be subject to substantial revision. Therefore, it is important not to read too much into any one monthly report and it is informative to consider each report in the context of other data that are becoming available.

February Employment Report: Private Businesses Add 246,000 Jobs

— Alan Krueger, Chairman of the Council of Economic Advisers

While more work remains to be done, today’s employment report provides evidence that the recovery that began in mid-2009 is gaining traction. Today’s report from the Bureau of Labor Statistics (BLS) shows that private sector businesses added 246,000 jobs in February. Total non-farm payroll employment rose by 236,000 jobs last month. The economy has now added private sector jobs every month for three straight years, and a total of 6.35 million jobs have been added over that period.

The household survey showed that the unemployment rate fell from 7.9 percent in January to 7.7 percent in February, the lowest since December 2008. The labor force participation rate edged down 0.1 percentage point to 63.5 percent in February.

More after the jump.
It is important to bear in mind that the reference period for today’s surveys was the week of February 10-16 for the household survey and the pay period containing February 12th for the establishment survey, both of which were before sequestration began. The Administration continues to urge Congress to move toward a sustainable Federal budget in a responsible way that balances tax loophole closing, entitlement reform, and sensible spending cuts, while making critical investments in the economy that promote growth and job creation and protecting our most vulnerable citizens.

According to the establishment survey, in February employment rose notably in professional and business services (+73,000), construction (+48,000), health care (+32,000), leisure and hospitality (+24,000), and retail trade (+23,700). Manufacturing gained 14,000 jobs in February. The manufacturing sector has added over half a million jobs over the last 37 months, the most for any such period since 1986. In the last two years the construction sector has added 306,000 jobs, with half of that increase occurring in the last five months. State and local governments lost 10,000 jobs in February, mostly in education. The local government education sector has now lost 340,700 jobs since its recent peak in November 2009.

As the Administration stresses every month, the monthly employment and unemployment figures can be volatile, and payroll employment estimates can be subject to substantial revision. Therefore, it is important not to read too much into any one monthly report and it is informative to consider each report in the context of other data that are becoming available.

America Gets Back To Work

America gained almost a quarter of a million jobs last month bringing the unemployment rate down for the fifth consecutive month. to 8.3%. According to TPM, “Analyst expectations ranged from high 100,000s to low 200,000s, so the numbers exceed expectations.”

“Hourly earnings are increasing and it shows the economy is “definitively gaining traction,” according to Mark Zandi, chief economy at Moody’s.

Meanwhile, the Congressional Budget Office’s budget outlook says what it always says “Deficits are huge, but projected to shrink dramatically in the next few years. Congress could sit back, do nothing, and deficits would fall from 7 percent of GDP to 1.5 percent of GDP” as the Bush era tax cuts expire.

Deficit forecasts after the jump.

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