US Employment Indicators

Pay no attention to the first estimate of payroll employment provided monthly by the Bureau of Labor Statistics (BLS). I have been giving this advice for many years, as I’ve observed that during economic expansions the data tend to be revised higher, and lower during recessions. I’ve argued that in assessing the strength or weakness of the economy, more weight should be given to the previous two months of data and their revisions than to the first preliminary estimate of the latest month. The most recent revisions are certainly encouraging, as are several of the other labor market indicators:

(1) Revisions find more jobs. Nonfarm payrolls were revised upward by 102,000 during August and September. During the third quarter, payroll employment rose 129,700 per month on average, up from 96,700 during Q2. October’s preliminary (and unreliable) gain was 80,000. Private sector payrolls were revised up by 84,000 during August and September, and rose 145,000 per month on average during Q3, while October’s gain was 104,000.

Over the past 12 months through September, revisions added 274,000 (based on first estimates) to total payrolls, which rose 1.59 million over this period (see chart above). Private sector employment rose 1.82 million over the past 12 months through October. This jibes with the ADP survey of private sector employment, which tends to be revised much less than the BLS data, and is up 1.74 million y/y through October.

(2) The household employment survey confirms improving trend in payrolls. This survey also tends to be less prone to revisions because it is based on one-time monthly surveys of households. According to this measure, employment rose 277,000 during October, and is up 1.22 million over the past 12 months.

(3) The indexes of aggregate hours worked continue to rebound. For all workers, it edged up 0.1% during October. For production and nonsupervisory employees, it rose 0.4% during the month, with manufacturing up 0.5%. Debbie reports that the percentage of industries expanding or maintaining their payrolls rose from 56.7% in September to 60.7% in October.

(4) The Monster Employment Index of online job ads shows an encouraging uptrend. This index rose to 151 during October, the highest reading since September 2008 (see chart below). Leading the way is the transportation and warehouse industry. Not far behind is the retail industry. The indexes for both industries have rebounded back to their record highs of 2007. Lagging, but still making decent comebacks, are the manufacturing and information technology indexes. The big laggard is the index for the finance and insurance industry.