Private sector job creation is growing but nowhere near fast enough to reduce unemployment rate

Nonfarm payrolls fell 95,000 in September as temporary Census workers declined 77,000 and government education workers dropped 58,000. Private payrolls increased 64,000 in September, about in line with expectations. Also, private payrolls in the prior two months were upwardly revised by 36,000.

The unemployment rate was unchanged at 9.6% in September as household employment rose 141,000. A broader measure of labor underutilization (which includes marginally attached workers and those working part time for economic reasons) increased to 17.1% in September from 16.7% in August.

This report changes nobody’s views about policy, in our judgment. Private sector employment is growing, but not fast enough to bring the unemployment rate down (although we are marginally encouraged by the pattern of upward revisions that seems to be reemerging). Those worried about the drag on employment from state and local budgets will find support for this view in this report, but as we noted in yesterday’s Daily Calendar we think the effect is exaggerated because of the seasonal adjustment issues with returning teachers to schools in September. Those worried about labor market slack (such as Chicago Fed President Evans) will note the broader measure of slack (U6) jumped back above 17% in September. We think, therefore, that the votes are there for some extension of QE by buying Treasuries, but no agreement on how to implement it. The next FOMC meeting will be like the Mad Hatter’s Tea Party—we just wish we could be a fly on the wall!

Comments

Popular posts from this blog

October retail sales come in strong, especially auto sales

Tea Party Buffalo Pictures

How to spot a fake Tea Partier