The Employment Picture is Getting Better

The first Friday of every month the Bureau of Labor Statistics releases the Labor Report showing how many jobs were gained or lost in the economy over the previous month. Expectations for October’s Jobs Report were high:

  • Payrolls: +234k
  • Unemployment: Down to 5.8%

And the report did not disapoint:

It is important to keep in mind that the initial numbers will often be revised in later months and sometimes the revisions are significant. Net revisions to the past two months this month added 31k jobs previously not reported.

A little known fact about these jobs numbers is that the BLS actually takes 2 surveys. The Establishment Survey is the widely reported jobs number but it also takes a survey from households. This survey is more volatile than the Establishment Survey but it was hugely positive in October.

Unemployment continued falling in October but the 5.8% widely reported is an incomplete measure of unemployment. It does not take into account marginally attached workers and people settling on part-time jobs for economic reasons. This more complete representation of the unemployment picture continues to plummet. This is encouraging for the economy as is the 0.2% jump in employment to population rate. More people found jobs than left the labor force.

The most encouraging piece from this report is the longer term trend of jobs growth. The story of the recovery has been of a slow and frustratingly steady expansion. That trend appears to be changing for the better.

The Federal Reserve may have ended its asset purchasing program but it is still in an incredibly stimulatory posture as it has pledged to keep interest rates as low as it can for a “considerable” amount of time. It will be able to do this as long as inflationary pressures remain low. Justin Wolfers summed the report up best.

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