"Economists are pessimists: they've predicted 8 of the last 3 depressions."
--Barry Asmus

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Friday, November 4, 2011

Employment Situation

There's really only one market indicator coming out today, but it's a big one: the Employment Situation report.  this report is the official word on how many nonfarm jobs (and how many nonfarm private sector jobs) were created for the previous month, what the unemployment rate is, how much average hourly earnings changed, and what the average work week is.  A good Employment Situation report creates joy and thanksgiving in the market place, because it points to a healthy economy.  A bad Employment Situation report?  Not so happy.
In September we saw 103,000 total new nonfarm payrolls (with 137,000 new private sector jobs, which does imply a loss of 34,000 public sector jobs).  The unemployment rate was 9.1%, average hourly earnings increased 0.2%, and the average workweek was 34.3 hours.
The Econoday-surveyed analysts aren't feeling like things will change much in October.  They're calling for a decline in the rate of job creation, with 90,000 total new nonfarm jobs (and 120,000 new private sector jobs), and no other changes.
And to find out how we actually did, we turn to the Bureau of Labor Statistics' Employment Situation Summary.  To start with, nonfarm payroll employment increased 80,000 in October and private sector employment increased by 104,000 (missing expectations in both cases).  The unemployment rate fell to 9.0%, average hourly earnings increased 0.2%, and the average work week remained steady at 34.3 hours..
Now, let's return to that 9.0% unemployment rate for a second.  That indicates 13.9 million people unemployed.  But the BLS has a very specific definition of "unemployment", meaning "people not working, but who have looked for work in the past 4 weeks".  It doesn't include people who are "employed part time for economic reasons" (8.9 million people) or "persons marginally attached to the labor force" (2.6 million people).  That first category is people who want permanent full-time employment, but are working part-time jobs because they can't find full-time work.  The second category is people who are not working, want employment, and have looked for work in the last twelve months.

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