Following the net gain of just 18,000 jobs in September (revised upwards from a loss of 33,000), the addition of 261,000 in October was the largest since September 2016. The gain was likely the first of many, driven by increased employment recovery due to Hurricanes Harvey and Irma. [See my white paper on the impact to housing and the economy from Hurricanes at http://blog.stewart.com/stewart/2017/09/13/hurricanes-housing-and-the-economy-analysis-from-stewart-chief-economist-ted-c-jones-phd/ The unemployment rate dipped to 4.1 percent, the lowest seen since 2000.
The net gain in jobs totaled 2.004 million in the prior 12-months. Total net job gains in the prior 12-months still significantly trails the 3.129 million level seen in February 2015, as shown in the graph.
The U.S. resumed the trend of having more jobs than any time in history, as shown in the following graph. From the pre-recession peak in January 2008, total job loss was 8.697 million to the February 2010 trough. Since then, the U.S. has created 17.227 million net new jobs.
Employment in the Leisure and Hospitality sector is an excellent proxy of the overall health index of the U.S. economy. People do not spend money on vacations, cruises, entertainment spas or dinners out unless they feel good about the future economy. My premise is that the U.S. economic outlook is healthy as long as the employment growth rate in Leisure and Hospitality exceeds that of the country overall. Current Leisure and Hospitality job growth in the prior 12 months was 1.81 percent versus 1.38 percent for the total economy. I see no recession on the horizon at this time foregoing unanticipated economic shocks. Note that Leisure and Hospitality employment dipped in September 2017. This was not, however, an indicator of a pending recession, but rather a function of Hurricanes Harvey and Irma. Hurricane Irma literally shut down that industry in Florida for two weeks or more in September.
Average hourly earnings, though down 1 cent per hour in October 2017, increased 63 cents in the past 12-months, a gain of 2.4 percent. Hourly earnings monthly since 2012 are shown in the following graph.
Other items in the October 2017 jobs report:
- The Number of Persons Unemployed for Less Than 5 Weeks dropped by 97,000 from September to 2.129 million
- Long-Term Unemployed (jobless for 27 or more weeks), now at 1.621 million, was down 112,000 from September 2017 and down 343,000 from a year ago
- Civilian Labor Force Participation Rateis now 62.7 percent, essentially unchanged from a year ago (62.8 percent)
- Employment-Population Ratiois now 60.2 percent versus 59.7 percent a year ago – the bigger the better
- Number of Persons Employed Part Time for Economic Reasons(also known as involuntary part-time workers) are individuals desiring full-time employment but either had their hours cut back or cannot find a full-time job), declined by 360,00 from September to October and is down 1.097 million from a year ago to 4.753 million
- Marginally Attached to the Labor Force(not currently counted in the labor force, want and are available for work and had looked for a job in the prior 12 months) dropped by 165,000 in the past year to 1.5535 million. Within that group, 524,000 were classified as Discouraged Workers – persons not currently looking for work because they believe there are no jobs available for them. Discouraged Workers increased by 37,000 in the past 12 months
- Health Care gained 22,000 jobs in October
- Manufacturing added 24,000 jobs in the past month
- Food Services and Drinking Places added 89,000 jobs in October following a 98,000 job decline in September (Hurricanes Harvey and Irma)
- Leisure and Hospitality jobs increased by 106,000 jobs in October and are up by 284,000 in the past 12-months
To read the entire BLS release along with detailed tables click https://www.bls.gov/news.release/pdf/empsit.pdf
What is impressive about job growth is the real decline in unemployment. For the week ending October 14, 2017, just 222,000 people applied for the first time for unemployment benefits – the fewest for a seven day period in the past 44 years. For the same week, a total 1.89 million people were on unemployment benefits, again the least seen in 44 years.
No doubt this economy is improving.
Things are looking up.