Mike Shedlock
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Initial Reaction

Some of the skew in last month's job report related to the government shutdown was taken back today, as expected. The labor force stats and participation rate were exceptions, and details reveal much weakness.

  • Last month employment fell by 735,000 due to the shutdown, this month it rose by 818,000.
  • Averaging the two months, household survey employment only rose by 83,000 (a mere 43,500 per month)
  • Last month, the change in those not in the labor force was +932,000. This month, the change was -268,000.
  • Last month the labor force declined by 720,000. This month it only rose by 455,000.
  • Averaging the two months, the labor force fell by 265,000. This explains the drop in the unemployment rate despite anemic employment growth on average.
  • Last month the participation rate fell 0.4 percentage points to a new low, this month, only 0.2 percentage points were taken back.


Ignoring the decline and the rise in employment over the past two months, the huge discrepancy between the household survey and the establishment survey persists.

In essence, this was a bad report, with people dropping out of the labor force like mad.

Revisions

This was the fifth straight month of revisions to the establishment survey but the revisions were relatively minor.

The change in total nonfarm payroll employment for September was revised from +163,000 to +175,000, and the change for October was revised from +204,000 to +200,000. With these revisions, employment gains in September and October combined were 8,000 higher than previously reported.

Explaining the Unemployment Rate

  • Unemployment fell by 0.3 percentage points
  • Employment rose by 818,000
  • Those in the labor force rose by 455,000
  • The civilian population rose by 186,000.
  • The Participation Rate (The labor force as a percent of the civilian noninstitutional population) rose 0.2 to 63.0%.
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Mike Shedlock

Mike Shedlock is a registered investment advisor representative for Sitka Pacific Capital Management.