by Calculated Risk on 11/02/2012 01:51:00 PM

Here are the earlier employment posts (with graphs):
• October Employment Report: 171,000 Jobs, 7.9% Unemployment Rate
• Employment: An encouraging report (also more graphs)
• Employment graph gallery

And a few more graphs ...

Seasonal Retail Hiring
According to the BLS employment report, retailers hired seasonal workers at about the same level as last year.

Click on graph for larger image.

Typically retail companies start hiring for the holiday season in October, and really increase hiring in November. Here is a graph that shows the historical net retail jobs added for October, November and December by year.

This really shows the collapse in retail hiring in 2008. Since then seasonal hiring has increased back close to more normal levels. Note: I expect the long term trend will be down with more and more internet holiday shopping.

Retailers hired 130.1 thousand workers (NSA) net in October. This is slightly below the numbers in 2003 through 2006 and about the same as in 2011. Note: this is NSA (Not Seasonally Adjusted).

This suggests retailers are somewhat optimistic about the holiday season. There is a decent correlation between retail hiring and retail sales, see: Retail: Seasonal Hiring vs. Retail Sales

Duration of Unemployment
This graph shows the duration of unemployment as a percent of the civilian labor force. The graph shows the number of unemployed in four categories: less than 5 week, 6 to 14 weeks, 15 to 26 weeks, and 27 weeks or more.

The general trend is down for all categories, but only the less than 5 weeks is back to normal levels.

The the long term unemployed is at 3.2% of the labor force - and the number (and percent) of long term unemployed remains a serious problem.

Unemployment by Education
This graph shows the unemployment rate by four levels of education (all groups are 25 years and older).

Unfortunately this data only goes back to 1992 and only includes one previous recession (the stock / tech bust in 2001). Clearly education matters with regards to the unemployment rate - and it appears all four groups are generally trending down.

Although education matters for the unemployment rate, it doesn't appear to matter as far as finding new employment (all four categories are only gradually declining).

Note: This says nothing about the quality of jobs - as an example, a college graduate working at minimum wage would be considered "employed".

Diffusion Indexes
This is a little more technical. The BLS diffusion index for total private employment was at 60.7 in October, up from 56.4 in September. For manufacturing, the diffusion index increased to 56.8, up from 46.3 in September.

Think of this as a measure of how widespread job gains are across industries. The further from 50 (above or below), the more widespread the job losses or gains reported by the BLS. From the BLS:

Figures are the percent of industries with employment increasing plus one-half of the industries with unchanged employment, where 50 percent indicates an equal balance between industries with increasing and decreasing employment.

We'd like to see the diffusion indexes consistently above 60 - and even in the 70s like in the '1990s. It appears job growth was spread across more industries in October, and that is good news.

by Calculated Risk on 11/02/2012 11:05:00 AM

This was another encouraging employment report. The 171,000 payroll jobs added in October, plus the 84,000 in upward revisions to the August and September reports, suggests decent job growth recently.

Some of this reported increase might be related to distorted seasonal factors (distorted by the severe recession). This was the third year in a row with weaker payroll growth in the summer, and it might be helpful to look at the year-over-year growth (year-over-year, payroll has increased close to 2 million jobs).

In a recent post, I highlighted Two Reasons to expect Economic Growth to Increase. The first reason was that we are nearing the end of the state and local government layoffs.  Recent reports suggests we may be near the bottom (last graph).

The second reason was a pickup in residential investment. This report showed an increase of 17 thousand construction jobs, however I think the BLS is under counting construction jobs at the turn. The preliminary benchmark revision showed an upward revision of 386,000 payroll jobs as of March (this is an annual revision bench marked to state tax records). A fairly large portion of the upward revision was for construction workers (85,000 more jobs added), and I suspect that the BLS statistical model that estimates new company formation (the Birth/Death model) is currently underestimating the formation of small construction companies.

Not all the news is good. U-6, an alternate measure of unemployment, only declined slightly to 14.6%. The average workweek was unchanged and average hourly earnings decreased slightly. "In October, the average workweek for all employees on private nonfarm payrolls was 34.4 hours for the fourth consecutive month. ... In October, average hourly earnings for all employees on private nonfarm payrolls edged down by 1 cent to $23.58. Over the past 12 months, average hourly earnings have risen by 1.6 percent. This is sluggish earnings growth.

The economy has only added 1.55 million private sector payroll jobs over the first nine months of the year. At this pace, the economy would only add 1.9 million private sector jobs in 2012; less than the 2.1 million added in 2011.

Overall this employment report was an improvement over recent reports, especially with the upward revisions. Here are a few more graphs...

Employment-Population Ratio, 25 to 54 years old

Click on graph for larger image.

Since the participation rate has declined recently due to cyclical (recession) and demographic (aging population) reasons, an important graph is the employment-population ratio for the key working age group: 25 to 54 years old.

In the earlier period the employment-population ratio for this group was trending up as women joined the labor force. The ratio has been mostly moving sideways since the early '90s, with ups and downs related to the business cycle.

This ratio should probably move close to 80% as the economy recovers. The ratio was unchanged in October at 76.0%, the highest level since early 2009 - but there is still a long ways to go.

Percent Job Losses During Recessions


This graph shows the job losses from the start of the employment recession, in percentage terms - this time aligned at maximum job losses.

In the earlier post, the graph showed the job losses aligned at the start of the employment recession.


Part Time for Economic Reasons

From the BLS report:

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) fell by 269,000 to 8.3 million in October, partially offsetting an increase of 582,000 in September. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job.

The number of part time workers declined in October to 8.34 millon from 8.61 million in September.

These workers are included in the alternate measure of labor underutilization (U-6) that declined to 14.6% in October.

Unemployed over 26 Weeks

This graph shows the number of workers unemployed for 27 weeks or more.

According to the BLS, there are 5.00 million workers who have been unemployed for more than 26 weeks and still want a job. This was up from 4.84 million in September. This is generally trending down, but is still very high. Long term unemployment remains one of the key labor problems in the US.

State and Local Government

This graph shows total state and government payroll employment since January 2007. State and local governments lost 129,000 jobs in 2009, 262,000 in 2010, and 230,000 in 2011. So far in 2012, state and local governments have actually added a few jobs, although state and local government fell by 7,000 in October.

Note: The dashed line shows an estimate including the benchmark revision.

It appears most of the state and local government layoffs are over, however the Federal government layoffs are ongoing. Overall government employment has seen an unprecedented decline over the last 3+ years (not seen since the Depression).

Overall this was a somewhat encouraging report.
All Employment Graphs

by Calculated Risk on 11/02/2012 08:30:00 AM

From the BLS:

Total nonfarm payroll employment increased by 171,000 in October, and the unemployment rate was essentially unchanged at 7.9 percent, the U.S. Bureau of Labor Statistics reported today.
...
[Household survey] The civilian labor force rose by 578,000 to 155.6 million in October, and the labor force participation rate edged up to 63.8 percent. Total employment rose by 410,000 over the month. The employment-population ratio was essentially unchanged at 58.8 percent, following an increase of 0.4 percentage point in September.
...
The change in total nonfarm payroll employment for August was revised from +142,000 to +192,000, and the change for September was revised from +114,000 to +148,000.

Click on graph for larger image.

With 171,000 payroll jobs added, and the upward revisions to the August and September reports, this was a solid report. And that doesn't include the annual benchmark revision to be released early next year that will also show more jobs.

This was above expectations of 125,000 payroll jobs added.

The second graph shows the unemployment rate. The unemployment rate increased slightly to 7.9%.

The unemployment rate is from the household report, and that report showed another month of strong job growth. The unemployment rate increased because of the significant increase in the labor force (and the increase in the labor force participation rate).

The third graph shows the employment population ratio and the participation rate.

The Labor Force Participation Rate increased to 63.8% in October (blue line. This is the percentage of the working age population in the labor force.

The participation rate is well below the 66% to 67% rate that was normal over the last 20 years, although most of the recent decline is due to demographics.

The Employment-Population ratio increased to 58.8% in October (black line). I'll post the 25 to 54 age group employment-population ratio graph later.

The fourth graph shows the job losses from the start of the employment recession, in percentage terms, compared to previous post WWII recessions. The dotted line is ex-Census hiring.

This shows the depth of the recent employment recession - worse than any other post-war recession - and the relatively slow recovery due to the lingering effects of the housing bust and financial crisis.

The fifth graph shows the job losses from the start of the employment recession, in percentage terms compared to other financial crisis (including the Great Depression).

This is an update to a graph by economist Josh Lehner (ht Josh for the data):

[I]n the context of the Big 5 financial crises, the current U.S. cycle suddenly does not look quite as dire. Notice how the x-axis, how long it takes to return to peak levels of employment, is measured in years(!) not months like the first graph.
...
[T]he U.S. labor market has performed better than 4 of the previous Big 5 crises, as identified by Reinhart and Rogoff, in terms of job loss and the return to peak time line.

Including the upward revisions, this was a much stronger report than for recent months. I'll have much more later ...

by Calculated Risk on 11/01/2012 09:18:00 PM

On Friday, at 8:30 AM ET, the BLS will release the employment report for October. The consensus is for an increase of 125,000 non-farm payroll jobs in September, slightly more than the 114,000 payroll jobs added in September. The consensus is for the unemployment rate to increase to 7.9%.

This month the ADP employment report showed an increase to 158,000 private sector jobs. That might suggest that the consensus is low, but the ADP methodology was changed and we will have to wait a few months to see if there is any improvement in predicting the BLS report.

Initial weekly unemployment claims averaged about 367,000 in October - near the lows for the year - and down from the September average of 373,000. That suggests a few more jobs added in October than in September.

For the BLS reference week (includes the 12th of the month), initial claims were at 392,000; up from 385,000 during the reference week in September - but that increase was due to timing and technical issues - so it might not be that negative.

The small business index from Intuit showed 10,000 payroll jobs lost, down from 40,000 added in September. That is a strong negative.

And on the unemployment rate from Gallup: U.S. Unadjusted Unemployment Down to 7.0% in October

UU.S. unemployment, as measured by Gallup without seasonal adjustment, fell to 7.0% for the month of October, down significantly from the 7.9% measured at the end of September. Gallup's seasonally adjusted unemployment rate is 7.4%, improved more than a half a point from September.

Note: Gallup only recently has been providing a seasonally adjusted estimate for the unemployment rate, so use with caution (Gallup provides some caveats). Note: So far the Gallup numbers haven't been very useful in predicting the BLS unemployment rate.

Friday:
• At 8:30 AM ET, the Employment Report for October will be released. The consensus is for an increase of 125,000 non-farm payroll jobs in October. The consensus is for the unemployment rate to increase to 7.9% in October, up from 7.8% in September.

• At 10:00 AM, the Manufacturers' Shipments, Inventories and Orders (Factory Orders) for September. The consensus is for a 4.0% decrease in orders.

Two more questions for the November economic prediction contest and four question for the November contest (Note: You can now use Facebook, Twitter, or OpenID to log in).

by Calculated Risk on 11/01/2012 07:13:00 PM

Fannie Mae reported that the Single-Family Serious Delinquency rate declined in September to 3.41% from 3.44% August. The serious delinquency rate is down from 4.00% in September last year, and this is the lowest level since March 2009.

The Fannie Mae serious delinquency rate peaked in February 2010 at 5.59%.

Freddie Mac reported that the Single-Family serious delinquency rate increased in September to 3.37%, from 3.36% in August. Freddie's rate is down from 3.51% in September 2011. Freddie's serious delinquency rate peaked in February 2010 at 4.20%.

These are loans that are "three monthly payments or more past due or in foreclosure".

Click on graph for larger image

In 2009, Fannie's serious delinquency rate increased faster than Freddie's rate. Since then, Fannie's rate has been falling faster - and now the rates are at about the same level.

Although this indicates some progress, the "normal" serious delinquency rate is under 1% - and it looks like it will be several more years until the rates back to normal.