The Employment Situation for October – Continued Positive But Subpar Gains

The Employment Situation report for October released by the Bureau of Labor Statistics (BLS) Friday continued the recent pattern of positive but subpar gains in the labor market. The establishment survey reported payroll employment expanded by 171,000 based on an increase of 184,000 in private sector payrolls and a decline of 13,000 in the government sector. August and September estimates were revised up by a total of 134,000 for the two months. The household survey reported the unemployment rate ticked up to 7.9% from 7.8% in September.

The uptick in the unemployment rate is less threatening than it might appear. The BLS characterized the unemployment rate as “essentially unchanged” based on the statistical properties of the household survey, but a more encouraging perspective comes from the details of the calculation. The number of employed persons increased in October by 410,000, not as large as the 873,000 increase in September, but still a strong gain by this survey’s standards. The increase in the unemployment rate was the result of the larger 578,000 increase in the labor force. This increase follows the 418,000 increase in September. This combination of strong job growth and an expanding labor force outweigh the slight increase in the unemployment rate and indicate a recovering labor market. The BLS also reported that the number of discouraged workers declined by 154,000 from one year ago. Discouraged workers are those who are available and ready to work, but believe there are no jobs available for them.

Overall it appears that job growth has recovered from its spring lull and the unemployment rate has trended downward. The labor market is showing signs of recovery but at a painfully slow rate.

 



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