This morning, we got a particularly important set of Bureau of Labor Statistics employment numbers. Articles had popped up all week about how they would affect the Federal Reserve’s slow-motion decision about raising interest rates. There were no massive surprises, but the data fell out strangely.
Many eyes were on the count of net new jobs, which some expected to be around last month’s 215,000. That fell short with 173,000, not a huge difference but the lowest since March. Yet the heavily publicized seasonally adjusted unemployment rate did better than forecast, dropping from 5.3% to 5.1%. Unadjusted joblessness fell more than the usual difference between July and August would suggest, down from 5.6% to 5.2%. Average hourly earnings, another input into the interest rate decision, grew 8 cents per hour for a robust 4.0% annual rate.
The four main secondary numbers were mixed. The count of people working part-time for economic reasons, or wanting but not finding a full-time position instead, gave back July’s improvement to return to 6.5 million. Those jobless for 27 weeks or longer stayed at 2.2 million. Of the two percentages telling the most about how common it is for Americans to be working, civilian labor force participation held at 62.6%, while the employment to population ratio improved by one tenth of a percent to 59.4%.
The American Job Shortage Number, or AJSN, giving in one number how many more positions could be quickly absorbed if finding work were easy and routine, dropped not only from lower actual unemployment, but from an almost 400,000 cut in the number of those wanting work but not looking for it in the previous year, which took about 300,000 off overall latent employment demand. Other marginally attached statuses almost broke even, with the most noteworthy a stunning almost 1.9 million increase in those saying they did not want work at all. All told, the AJSN fell 849,000, as follows:
The AJSN continued its strong year-over-year improvement. August 2014’s number was more than 1.6 million higher, all but 200,000 of that on lower official unemployment and the rest on fewer people discouraged or not looking for a year or more, offset slightly by the 2.3 million-plus gain in those expressing no interest in having a job.
So how good were this morning’s numbers really? Despite net new positions disappointing, they are in line with the rest of 2015’s – lower official joblessness, higher and higher number of people leaving the workforce, labor force participation and employment-to-population edging slowly but persistently down. The economy keeps getting better, but we are still short more jobs than just before the Great Recession, of which less than 41% would be filled by people officially unemployed.
With so much latent demand for work, the Fed would be foolish to push up interest rates now. The turtle is again creeping forward, but he would find himself stopped, or even backtracking, if what is still weak incentive for companies to create positions and spend money were impeded. Janet Yellen and company, you have done well to keep us out of a recession – don’t blow it now.