September 2015 Employment Report

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According to the Bureau of Labor Statistics’ (BLS) establishment survey, non-farm payroll employment increased by 142,000 jobs in August -- well below expectations of 203,000. Moreover, combined July and August employment gains were slashed by 59,000 (July: -22,000; August: -37,000). Meanwhile, the unemployment rate (based upon the BLS’s household survey) was unchanged at 5.1% as a reduction in the number of employed workers (236,000) was “swamped” by a 579,000-person contraction in the labor force. 

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Observations from the employment report include:

* The disparity in jobs gains between the establishment (+142,000) and household (-236,000) surveys was quite significant.

* “Employment in mining continued to decline in September (-10,000),” the BLS report said, “with losses concentrated in support activities for mining (-7,000). Mining employment has declined by 102,000 since reaching a peak in December 2014.”

* Manufacturing lost 9,000 jobs in September. Year-to-date through September, manufacturing has gained a net 17,000 jobs; during August and September, however, manufacturing surrendered 27,000 of the 44,000 jobs gained earlier in 2015.

* Construction added 8,000 jobs, bringing the YTD gain to 121,000.

* On a “gross” basis, over 100% (118,700) of September’s private-sector (118,000) job growth occurred in the sectors typically associated with the lowest-paid jobs -- Retail Trade: +23,700; Professional & Business Services: +31,000; Education & Health Services: +29,000; and Leisure & Hospitality: +35,000. This is a persistent issue, as we have repeatedly highlighted: There are 1.43 million fewer manufacturing jobs today than at the start of the Great Recession in December 2007, but nearly 1.47 million more Food Services & Drinking Places (i.e., wait staff and bartender) jobs. 

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* The employment-population ratio dropped to 59.2%; roughly speaking, for every five people added to the population, fewer than three are employed. Meanwhile, the number of employment-age persons not in the labor force soared by 579,000 to a new record of over 94.6 million. 

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* The labor force participation rate (LFPR) fell to 62.4%; prior to June the LFPR had not been that low since October 1977. Average hourly earnings of all private employees fell by $0.01 (to $25.09), resulting in a 2.2% year-over-year increase. For all production and nonsupervisory employees (pictured above), hourly wages were unchanged at $21.08 (+1.9% YoY). With the CPI running at an official rate of 0.2% YoY, wages are technically rising in real (inflation-adjusted) terms. The average workweek for all employees on private nonfarm payrolls edged down to 34.5 hours in September. 

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* Finally, full-time jobs fell by 185,000 while part-time jobs inched up by 53,000. Full-time jobs have been trending higher since December 2009, and are 36,000 below the pre-recession high (even while the non-institutional, working-age civilian population has risen by an estimated 18.2 million). Part-time jobs, by contrast, have been stuck in a channel between roughly 27 and 28 million.

The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.