The establishment survey showed a gain of 148,000 jobs. July was revised lower, from +104,000 to +89,000. August was revised higher, from +169,000 to +193,000. The net effect was +9,000 more than previously reported.
This was the third straight month of revisions. The previous two revisions were significantly lower. Perhaps the BLS has numbers they are happy with now.
The unemployment rate dropped 0.1 to 7.2%. It's the household survey that determines the unemployment rate, not the establishment survey. So let's take a look at the factors.
Explaining the Unemployment Rate Drop
Employment rose more than the labor force, so the unemployment rate declined.
September BLS Jobs Statistics at a Glance
Quick Notes About the Unemployment Rate
September 2013 Jobs Report
Please consider the Bureau of Labor Statistics (BLS) September 2013 Employment Report.
Total nonfarm payroll employment rose by 148,000 in September, and the unemployment rate was little changed at 7.2 percent, the U.S. Bureau of Labor Statistics reported today. Employment increased in construction, wholesale trade, and transportation and warehousing.
Click on Any Chart in this Report to See a Sharper Image
Unemployment Rate - Seasonally Adjusted
Employment History Since January 2009
click on chart for sharper image
Change from Previous Month by Job Type
Hours and Wages
Average weekly hours of all private employees remained at 34.5 hours. Average weekly hours of all private service-providing employees was flat at 33.3 hours. Average hourly earnings of all private workers rose $0.04 to $20.24. Average hourly earnings of private service-providing employees rose $0.05 to $20.02.
Real wages have been declining. Add in increases in state taxes and the average Joe has been hammered pretty badly. For 2013, one needs to factor in the increase in payroll taxes for Social Security.
For further discussion of income distribution, please see What's "Really" Behind Gross Inequalities In Income Distribution?
BLS Birth-Death Model Black Box
The BLS Birth/Death Model is an estimation by the BLS as to how many jobs the economy created that were not picked up in the payroll survey.
The Birth-Death numbers are not seasonally adjusted, while the reported headline number is. In the black box the BLS combines the two, coming up with a total.
The Birth Death number influences the overall totals, but the math is not as simple as it appears. Moreover, the effect is nowhere near as big as it might logically appear at first glance.
Do not add or subtract the Birth-Death numbers from the reported headline totals. It does not work that way.
Birth/Death assumptions are supposedly made according to estimates of where the BLS thinks we are in the economic cycle. Theory is one thing. Practice is clearly another as noted by numerous recent revisions.
Birth Death Model Adjustments For 2012
Birth Death Model Adjustments For 2013
Once again: Do NOT subtract the Birth-Death number from the reported headline number. That approach is statistically invalid.
In general, analysts attribute much more to birth-death numbers than they should. Except at economic turns, BLS Birth/Death errors are reasonably small.
For a discussion of how little birth-death numbers affect actual monthly reporting, please see BLS Birth/Death Model Yet Again.
Table 15 BLS Alternate Measures of Unemployment
click on chart for sharper image
Table A-15 is where one can find a better approximation of what the unemployment rate really is.
Notice I said "better" approximation not to be confused with "good" approximation.
The official unemployment rate is 7.2%. However, if you start counting all the people who want a job but gave up, all the people with part-time jobs that want a full-time job, all the people who dropped off the unemployment rolls because their unemployment benefits ran out, etc., you get a closer picture of what the unemployment rate is. That number is in the last row labeled U-6.
U-6 is much higher at 13.6%. Both numbers would be way higher still, were it not for millions dropping out of the labor force over the past few years.
Labor Force Factors
Were it not for people dropping out of the labor force, the unemployment rate would be over 9%. In addition, there are 7,926,000 people who are working part-time but want full-time work.
Grossly Distorted Statistics
Digging under the surface, much of the drop in the unemployment rate over the past two years is nothing but a statistical mirage coupled with a massive increase in part-time jobs starting in October 2012 as a result of Obamacare legislation.
Mike "Mish" Shedlock
Read more at http://globaleconomicanalysis.blogspot.com/2013/10/establishment-survey-148k-jobs.html#aZJDelT4Pvr6wIaS.99
Hussman's Open Letter to the Fed; The Problem with Bubbles; Textbook Pre-Crash Bubble; Reflections on Not Chasing Bubbles; Integrity vs. Respect | Mike Shedlock