Was this the result of a strike at General Motors, or the inevitable outcome of 1.9% GDP growth in the previous quarter? Whatever the cause, the US economy only added 128,000 jobs in October, with unemployment ticking up a tenth in a largely meaningless difference to 3.6%. However, the Trump administration did get some good news on revisions to the past two reports:
Total nonfarm payroll employment rose by 128,000 in October, and the unemployment rate was little changed at 3.6 percent, the U.S. Bureau of Labor Statistics reported today. Notable job gains occurred in food services and drinking places, social assistance, and financial activities. Within manufacturing, employment in motor vehicles and parts decreased due to strike activity. Federal government employment was down, reflecting a drop in the number of temporary jobs for the 2020 Census. …
The labor force participation rate was little changed at 63.3 percent in October, and the employment population ratio held at 61.0 percent. Both measures were up by 0.4 percentage point over the year.
This level is at best a replacement level for the US economy when one considers population growth of around 200,000 a month, more or less the average in the US. However, the GM strike did have a big impact on these numbers, taking as much as 42,000 off the top for October. Economists had been even more pessimistic about October, with CNBC pegging the average estimate at 75,000.
The best news for the White House came on the revisions to August and September, both of which added significant numbers of jobs. The BLS revised August upward by 51,000 to 219,000, while September got a 44K boost to 180,000. The addition of 95,000 jobs boosted the three-month average to 176,000 — a decent if not spectacular number, above replacement level but not necessarily enough to keep pressure on wages. Had the strike never occurred, the number would have been a little higher than that, but still far from the higher-growth 2018 averages.
The wage indices, however, were also a bright spot in today’s otherwise wan report. Wages had been flat in September, but ticked up in October:
In October, average hourly earnings for all employees on private nonfarm payrolls rose by 6 cents to $28.18. Over the past 12 months, average hourly earnings have increased by 3.0 percent. In October, average hourly earnings of private-sector production and nonsupervisory employees rose by 4 cents to $23.70. (See tables B-3 and B-8.)
The average workweek for all employees on private nonfarm payrolls was unchanged at 34.4 hours in October. In manufacturing, the average workweek decreased by 0.2 hour to 40.3 hours, while overtime was unchanged at 3.2 hours. The average workweek of private-sector production and nonsupervisory employees held at 33.6 hours.
That’s not a large pickup in wages, but the 3.0% annual rate keeps wage growth above inflation. It also demonstrates continued health in the job market, even if it’s not hitting high levels of growth. There is still a question whether these numbers are sufficient to keep voters loyal to Trump in the next election, but at least they’re better than the stagnation that threatened in last month’s report.
CNN took a sunny view of today’s report:
The US economy added 128,000 jobs in October. The unemployment rate rose slightly to 3.6%. The United States lost 36,000 manufacturing jobs last month, impacted primarily by the GM strike. https://t.co/2lPhLd5TlJ pic.twitter.com/2EsC1Jhxct
— CNN (@CNN) November 1, 2019
It’s worth noting that those GM jobs will reappear in next month’s report. Just as we’re not getting too concerned about their disappearance in this report, don’t get too excited when they suddenly materialize again.
CNN wasn’t the only one happy with the win against expectations. The Dow Jones futures board also showed some enthusiasm, jumping up over 100 points after the release of the report.
The Associated Press’ Josh Boak concludes that the report was a mixed bag, and he isn’t convinced that wage growth is going to continue at this pace:
Still, hiring has slowed this year. Gains averaged just 167,000 in the past 10 months, down from a monthly average of 223,000 in 2018, according to Labor Department figures.
Even so, job growth, remains high enough to keep the unemployment rate from rising in an otherwise mostly lackluster economy. On Wednesday, the government estimated that the economy grew in the July-October quarter at a modest 1.9% annual rate.
Surveys suggest that employers have turned cautious in large part because of heightened uncertainties caused by President Donald Trump’s trade conflicts. The president has imposed tariffs on many goods imported to the U.S., and other nations have retaliated with import taxes on U.S. exports. …
Sluggish pay growth is another source of concern. The low unemployment rate and a shortage of qualified workers in many industries have nevertheless failed to accelerate wages across the job market as traditional economy theory would suggest.
Wage growth shot upward under Donald Trump’s economic initiatives in 2017-18, but it has been getting spotty of late. That is one indicator where Trump cannot withstand retreat. Any hint that worker wages are getting squeezed by stagnation and inflation, and out the window goes Trump’s economic argument in 2020. Republicans had better start pushing for more regulatory reform to boost wages or get Trump to finish off his trade war with China, and soon.
Update: The math looks pretty shaky here …
Wow, a blowout JOBS number just out, adjusted for revisions and the General Motors strike, 303,000. This is far greater than expectations. USA ROCKS!
— Donald J. Trump (@realDonaldTrump) November 1, 2019
BLS reported 128,000 jobs added, with 95,000 in revisions to August and September. Add in the 42,000 from the strike — which will get added back into next month’s report anyway — and it comes up to 265,000, not 303,000. Even the higher estimate of 48,000 on strike (figures varied in terms of impact on the employment numbers) would push that to 271,000. At any rate, the revisions weren’t created in October, which is why the BLS posts them as revisions to previous months.
Update: Kudlow to the rescue?
WH math putting October jobs increase at 303,000, not just 128,000 as in @BLS_gov report.
Per Kudlow: add 95,000 from prior two month job# increases; plus 60,000 adjustment for the GM strike and 20,000 adjustment for census workers. He calls them real numbers.
— Mark Knoller (@markknoller) November 1, 2019
If Kudlow means “add in 20K jobs that don’t exist because Census,” that’s not a winning argument. Also, the top estimates of strikers at GM were 48K, not 60K, and revisions apply to the month revised, not the current month. Other than that …