September 2018 Jobs Review
Jobs Review Snapshot
- The unemployment rate fell to 3.7%, the lowest since December 1969.
- 134,000 jobs were created in September; July/August job creation was 87,000 higher than initially reported.
- Hurricane Florence may have held back the job creation numbers.
Details
The Bureau of Labor Statistics (BLS) reports that a total of 134,000 jobs were added in September. There were 121,000 private-sector jobs created and 13,000 additional government jobs. The largest gains were in professional and business services (+54,800), healthcare (+29,800), and transportation/warehousing (+23,800). The manufacturing industry gained 18,000 jobs. Job losses were reported in retail (-20,000) and leisure/hospitality (-17,000).
The employment-to-population ratio ticked up to 60.4% from 60.3%. The overall (ages 16 and older) labor force participation rate (LFPR) was unchanged at 62.7%. The prime working-age (ages 25 to 54) LFPR declined from 82.0% to 81.8%. This remains short of its 83% average from the previous business cycle’s expansion, which suggests room for elevated rates of economic growth.[i]
The headline unemployment rate (U-3), which counts as unemployed those who searched for work in the last four weeks, declined from 3.9% to 3.7%,[ii] the lowest since December 1969. The “real” unemployment rate (U-6), ticked up from 7.4% to 7.5%. The U-6 includes those in U-3, those who searched for work in the past twelve months, and those who want full-time work but can only find part-time work.
Average hourly earnings (AHE) and average weekly earnings (AWE) of production and nonsupervisory workers[iii] were 2.8% and 3.1% higher than 12 months ago, respectively.[iv] An AWE growth rate that exceeds the AHE growth rate indicates people are working more hours per week than a year ago. During the previous expansion AHE and AWE each averaged 3% growth per year, compared with respective averages of only 2.1% and 2.4% during the Obama-era portion of the current expansion.
Context
This was another strong jobs report. Most impressively, the unemployment rate (U-3) fell to 3.7%, the lowest since December 1969. Though September’s job creation numbers may have been affected by Hurricane Florence, it was notable that 87,000 more jobs were created in August and July than initially reported. An average of 208,000 jobs per month have been created this year, almost twice the 106,000 that the Congressional Budget Office had projected for 2018 before tax and regulatory reform efforts began in January 2017. Almost 1.9 million jobs have been created since the Tax Cuts and Jobs Act (TCJA) became law.
Noteworthy
Jobs numbers were revised up for August from 201,000 to 270,000 (second estimate) and for July from 147,000 to 165,000 (final estimate).
The October Employment Situation release is scheduled for November 2 at 8:30 a.m.
[i] JEC considers the prime working-age LFPR, which measures the ratio of those aged 25 to 54 who are currently employed or have sought work in the past four weeks, a better indicator because demographic factors are affecting the overall LFPR. The dates used to calculate the previous business cycle expansion’s 83% average prime-age LFPR are November 2001 to December 2007.
[ii] The U-3 rate is less meaningful than it once was because the labor force participation rate has been low since the last recession.
[iii] JEC prefers the production and nonsupervisory workers measure of wages as more representative of the average worker. Production and nonsupervisory workers account for over 82% of all private-sector employees. For service-producing industries, this measure excludes supervisors and employees who are also owners. For the goods-producing sector, workers engaged in management, sales, and accounting are excluded.
[iv] These measurements consist only of gross wages and salary and do not account for non-monetary benefits and compensation. They are not adjusted for inflation. AWE accounts for the average number of hours worked while AHE does not.
