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Job Growth Is Back On Track With 261,000 New Jobs In October

Employment growth recovered in October from a hurricane-impacted lull in September, with 261,000 new jobs added for the month, according to the U.S. Bureau of Labor Statistics Employment Situation Report issued November 3 (Exhibit 1). The September number, which was originally reported as a 33,000 decline in jobs, was revised up to an 18,000 gain for Busy crosswalkthe month. That means jobs have increased for 85 consecutive months.

The unemployment rate also dropped to 4.1%, the lowest level since December 2000 (Exhibit 2). The drop in unemployment was partially attributed to a drop in labor force participation, as 765,000 people dropped out of the labor pool.

Exhibit 1Much of the growth in October was in lower paying jobs in the food services and drinking establishments which had been impacted in September by the hurricanes.

As a result, wage growth stalled in November, as the average hourly earnings for all employees on private nonfarm payrolls declined by $.01 to $26.53. The previous month, wages had risen by $0.12. Over the past 12 months, average hourly earnings have increased by $0.63, or 2.4% (Exhibit 3).

Exhibit 2Initial jobless claims have remained at an extremely low level, with 229,000 claims filed the week ending October 28, according to the Department of Labor Unemployment Insurance Weekly Claims report (Exhibit 4). The 4-week moving average was 232,500, a decrease of 7,250 from the previous week's revised average. This is the lowest level for this average since April 7, 1973.

The advance number for seasonally adjusted insured unemployment during the week ending October 21 was 1,884,000, the lowest level for insured unemployment since December 29, 1973. Exhibit 3 In all, 1.94 million Americans are receiving unemployment benefits, which is the lowest level since the mid-1970s. This is even more impressive considering the difference in the size of the labor force.

Initial jobless claims have remained under 300,000 for 139 consecutive weeks – the longest stretch since 1970.

Here are some of the other key trends highlighted in the report:  Exhibit

  • The number of long-term unemployed (those jobless for 27 weeks or more) dipped slightly to 1.6 million and accounted for 24.8% of the unemployed (Exhibit 5).
  • The number of persons employed part time for economic reasons, declined by 369,000 to 4.8 million (Exhibit 6). Over the past 12 months, the number of involuntary part time workers has declined by 1.1 million.
  • The average workweek for all employees on private nonfarm payrolls Exhibit 5was unchanged at 34.4 hours (Exhibit 7).
  • The labor force participation rate declined by 0.4% to 62.7%. The employment-population ratio declined by 0.2% to 60.2%.
  • The labor force participation rate for those in their prime working years (age 25-54) declined by 0.2% to 81.6%, which is about 1.4% below the pre-recession level (Exhibit 8) . That continues to be a weakness in the employment recovery.

With a healthy economy, we expect the positive job growth trend to continue in the coming months. But slow wage growth continues to be a concern.  As the job market tightens, we may see a faster increase in wages as companies compete for qualified workers.

Exhibit 7Exhibit 8 


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