September 2022 Employment Report

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The Bureau of Labor Statistics‘ (BLS) establishment survey showed nonfarm employers added 263,000 jobs in September, the slowest gain since April 2021 but slightly better than the 250,000 expected. July and August employment changes were revised up by a combined 11,000 (July: +11,000; August: unchanged). Meanwhile, the unemployment rate (based upon the BLS’s household survey) ticked down by 0.2 percentage point, to 3.5%, as the number of employed rose (+204,000) while the labor force shrank (-57,000).

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Observations from the employment reports include:

* The correspondence between the establishment (+263,000 jobs) and household surveys (+204,000 employed) was better than usual.

* Goods-producing industries added 44,000 jobs; service-providers: +219,000. Notable job gains occurred in leisure and hospitality (+83,000) and in health care (+60,100). Total nonfarm employment (153.0 million) is now 514,000 jobs above its pre-pandemic level in February 2020. Private-sector employment is 1.1 million higher than in February 2020, while government employment is 597,000 lower. Employment is also perhaps nearly 7.4 million below its potential if accounting for growth in the working-age population since January 2006.

Manufacturing added 22,000 jobs. That result seems to run counter to the change in the Institute for Supply Management’s (ISM) manufacturing employment subindex, which fell back into contraction in September. Wood products employment expanded by 2,200 (ISM fell); paper and paper products: +100 (ISM fell); construction: +19,900 (ISM rose).

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* The number of employment-age persons not in the labor force rose (+229,000) to 99.7 million; that level is 4.6 million higher than in February 2020. Despite the above-mentioned job gains, the employment-population ratio (EPR) was unchanged at 60.1%; the EPR is 1.1PP below the February 2020 level. 

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* Because the civilian labor force shrank by 57,000 in September, the labor force participation rate edged down fractionally to 62.3%. Average hourly earnings of all private employees increased by $0.10 (to $32.46), and the year-over-year increase slipped to +5.0%. Since the average workweek for all employees on private nonfarm payrolls remained at 34.5 hours, average weekly earnings rose (+$3.45) to $1,119.87 (+4.9% YoY). With the consumer price index running at an annual rate of +8.3% in August, the average worker keeps losing purchasing power. In fact, average hourly wages have lagged CPI since April 2021; average weekly wages since June 2021.

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* Full-time jobs rose (+326,000) to 132.7 million. Workers employed part time for economic reasons (shown in the graph above) -- e.g., slack work or business conditions, or could find only part-time work -- fell by 306,000, while those working part time for non-economic reasons edged up (+189,000); multiple-job holders: -1,000.

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For a “sanity test” of the job numbers, we consult employment withholding taxes published by the U.S. Treasury. Although “noisy” and highly seasonal, the data show the amount withheld in September decreased by $16.4 billion, to $237.0 billion (-6.5% MoM; +1.7% YoY). To reduce some of the monthly volatility and determine broader trends, we average the most recent three months of data and estimate a percentage change from the same months in the previous year; the average of the three months ending September was 5.8% above the year-earlier average.

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.