U.S. Jobs: Still Growing (Slowly) in October
For the third month in a row now, U.S. employment numbers have initially come in at less than 170,000. I've called this a return to "slow growth mode," wherein the economy adds enough jobs to keep up with new workforce entrants, but otherwise shows only slack signs of growth and expansion. So it was again in October, when 128,000 jobs were added, and unemployment came in at another near-historic low of 3.6 percent.
That said, August numbers were bumped from 168,000 to 219,000, and September jumped from 136,000 to 180,000. Combined, the monthly average for past three-month period comes in at a pretty respectable 176,000. Likewise, wages are still inching up, and added $0.06 per to the "average hourly earnings for all employees on private nonfarm payrolls" (to use the cant phrase from the latest Employment Situation Summary put out by the U.S. Bureau of Labor Statistics).
That brings the average hourly wage for such workers to $28.18. In turn, this translates into 3.0 percent wage growth for the trailing 12-month period. Not exactly stellar, but ahead of inflation (which is at 1.7 percent for the twelve-month period from October 2018 to September 2019). Likewise, labor force participation and employment-population numbers are also up slightly by 0.4 percent for the year (the former at 63.3 percent, the latter at 61 percent).
Where Did Job Growth Happen?
For October job gains occurred in the following sectors:
Food services and drinking places: 48,000 jobs added, ahead of the 38,000 monthly average for the August-October quarter, and well head of the 16,000 job average for the first 7 months of 2019. Seasonal hiring for increased hospitality during the holidays seems a likely impetus here.
Social assistance: Up by 20,000 for October, and up from the trailing 12-month average of 11,600 jobs per month in this sector. When social assistance hiring goes up, it's often because more people need help of that kind.
Financial activities: Up by 16,000 jobs, mostly in real estate and rental and leasing of property, but also in credit intermediation (loan refinancing). This compares to a 9,000 monthly average in this area for the past 12 months.
Professional and business services: Up by 22,000 jobs, but down by 11,000 from the 33,000 monthly average for 2019 so far (and well down from the 47,000 monthly average for 2018).
Health care employment: Up by 15,000 jobs, well down from the 33,500 monthly average over the trailing 12-month period.
This was offset by employment dips in:
Motor vehicles and parts manufacturing: Backsliding here is probably mostly as a result of the UAW strike at GM. Generally, manufacturing jobs were down by an aggregate 36,000 jobs, of which the automotive component was down 42,000 jobs (indicating a 6,000 offset from elsewhere in manufacturing jobs).
Federal government employment: Owing to the predictable end of temporary U.S. Census-related positions as the 2020 reporting deadline approaches.
All in all, I don't see this particular monthly report as especially positive. To me, it shows some temporary hiccups — automotive labor actions and U.S. Census hiring patterns chief among them — but it also shows slowdowns in what have been the strongest sectors for three years and more. If health care and professional & business services are headed south, it's bad news. I'm amazed that the markets have continued their steady and relentless advance in the week since the latest report appeared on Friday, Nov. 1.
Other Perspectives on the October Report
CompTIA's Employment Tracker is always worth consulting when the U.S. BLS releases its monthly reports, because its focus is exclusively and unabashedly focused on IT. The headline of their Nov. 1 press release already corroborates my analysis: Little Movement in October U.S. Tech Sector Hiring, CompTIA Analysis Finds.
CompTIA reports that 5,400 jobs were added to the IT sectors they track for October (which is just over 0.5 percent of that total working population of around 10 million workers). They still assert a positive outlook for IT job growth going forward, even though they recognize the October numbers are "underwhelming."
Their analyses shows, however, that IT unemployment remains locked at 2.2 percent, which is astonishingly low, as it has been for most of 2019. For more information on the stats CompTIA tracks, see their November 2019 Employment Tracker, which summaries IT employment through October 2019.
CNBC takes a more positive spin on the latest report and quotes Steve Rick, chief economist at CUNA Mutual group, who says, "This report is yet another sign that the economy is still strong right now and adds to a list of indicators that are looking optimistic of late." Rick adds: "The vigor of this labor market, along with a more positive housing market and solid Q3 GDP, should offer some welcome reassurance."
Thus CNBC asserts that fears of a looming recession are neither justified nor suggested by this latest labor report. Likewise the New York Times entitles its analysis, "Job Market Shows Resilience, Quieting Recession Fears." In general business and economic reporting has been of this bent, which probably explains the recent buoyancy in U.S. and global stock markets.
As for me, I remain convinced that "slow and steady as she goes" describes what the handling of the U.S. job market looks like for the foreseeable future. I've seen enough of this kind of thing since the post 2008-2009 period to know that slow can be maddening at times, and that "steady" is not a word that wage-earners like to see used to describe the size of their pay packets over time.
But at least, we're not rushing headline down a negative trend line, nor apparently headed for recession, either. Boring may not encourage discretionary spending or celebration, but it also gives few cause for tears. Stay tuned and we'll see if the roller coaster starts moving on the vertical axis next month!