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:

Payrolls +214k in October. Sept revised from +248k to +256k August revised from +180k to +203k Unemployment down to 5.8%

— Justin Wolfers (@JustinWolfers) November 7, 2014

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.

August and September revised up combined 31k. With September revision, now 8 straight months of 200k+ job growth.

— Ben Casselman (@bencasselman) November 7, 2014

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.

Household survey shows employment up a massive +683k. I give this about a 20% weight, suggesting 0.2*683k+0.8*214k = 308k. WOWSERS.

— Justin Wolfers (@JustinWolfers) November 7, 2014

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.

Broader unemployment, U6, fell from 11.8 to 11.5 percent. A year ago it was 13.7 percent.

— Matt O’Brien (@ObsoleteDogma) November 7, 2014

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 longer-run trend in job growth has been pointing more clearly upward in recent months. pic.twitter.com/IyZ3NjMqQa

— Ben Casselman (@bencasselman) November 7, 2014

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.

There is nothing not to like in this payrolls report. Healthy jobs growth Better in household survey Nice revisions No inflationary pressure

— Justin Wolfers (@JustinWolfers) November 7, 2014