Total non-seasonally adjusted, (NSA) nonfarm payroll employment increased by 261,000 in October up from September’s decline of 18,000. A total of 148,006,000 people were employed in non-farm jobs and the unemployment rate fell to 4.1% according to the U.S. Bureau of Labor Statistics, (BLS) report. Employment growth has averaged 169,000 per month thus far this year, slightly less than the average monthly gain of 187,000 for all of 2016.
Figure 1 shows the history of the total number of US workers employed in red on the left axis and the monthly change in blue on the right axis. Employment level reached a low point of 127.8 million (M), in January 2010. Since that time the economy has created 20.18M net jobs.
The unemployment rate edged down by 0.1 % to 4.1% in October. There were 6.5 million, (M) people collecting benefits 281,000 fewer than last month. The unemployment rate has decreased by 0.7 percentage points since January, while the number of people out of work has declined by 1.1M. The number of long-term unemployed, (>27 weeks) totaled 1.6M and was little changed in October. These folks account for 25% of the total unemployed.
Manufacturing employment rose by 24,000 in October, with job gains in computer and electronic products (+5,000) and chemicals (+4,000). Employment in fabricated metals continued to trend up (+4,000). Manufacturing has added 156,000 jobs since a recent employment low in November 2016. The average workweek for all employees on private nonfarm payrolls was unchanged at 34.4 hours in October. In manufacturing, the workweek increased by 0.2 hour to 41.0 hours, and overtime edged up by 0.1 hour to 3.5 hours.
The labor force participation rate decreased by 0.4 percentage point to 62.7% in October but has shown little movement on net over the past 12 months. The employment-population ratio declined by 0.2 percentage point over the month to 60.2%, after increasing by 0.3 percentage point in September. The employment-population ratio is up by 0.5 percentage point over the year.
Figure 2 presents a chart on the employment to population ratio, (Labor Force Employed of working age/Total Population). This ratio plunged from the 62 to 63 range prior the recession to the 58 to 59 level in the 2010 to 2014 timeframe. It has been steadily climbing since then reaching an average of 62.9 YTD 2017. The ratio is improving but remains well below the pre-recession level. Figure 2 also presents the employment to population ratio (same scale). This ratio is trending higher and now stands at 60.2, up from a low of 58.2 on October 2013.
September’s Job Openings and Labor Turnover Survey indicates a steady expansion within the labor market. Job openings remain abundant as there were 6.1M job openings, roughly the same as in August but well up from the year ago number of 5.7M. The job opening rate remained at 4%, almost the same as the unemployment rate. Separations increased in construction, likely because these workers found better positions at competing employers. The quit rate increased to 2.2% from 2.1%. This is as high as it has gotten during the current business cycle. It has ranged between 2.1% and 2.2% all year. The layoff and discharge rate was unchanged in September at 1.2% and was unchanged for a fourth consecutive month at 1.2%.
This month’s report is indicative a healthy labor market, rising quits have driven separations while layoffs have remained quite low.
At Gerdau, we keep a keen eye on the employment numbers, especially manufacturing and construction since this is where most long product steel ends-up. In addition we know that growth in net job creation correlates to increased steel consumption.