Friday, November 2, 2018

Another Fine Employment Month, but the American Job Shortage Number (AJSN) Says Latent Demand Is Up Almost 100,000 to 15.7 Million

Once again, this morning’s Bureau of Labor Statistics Employment Situation Summary not only exceeded expectations but showed our labor market is still improving.  Net nonfarm payroll positions, for which The Wall Street Journal publicized an analyst-projected 188,000 gain, went up 250,000.  The marquee seasonally-adjusted unemployment rate stayed at 3.7%, but the unadjusted one, despite little seasonal difference between September and October, fell from 3.6% to 3.5%.  There are still an adjusted 1.4 million people officially jobless and out for 27 weeks or longer, and 4.6 million working part-time for economic reasons or holding on to shorter-work-hours positions while thus far unsuccessfully seeking full-time ones, but we gained 100,000, to 6.1 million, total unemployed.  The two measures of how common it is for Americans to be working, the labor force participation rate and the employment-population ratio, each rose a substantial 0.2% to reach 62.9% and 60.6% respectively.  Average private nonfarm payroll wages went up a hair over inflation, 5 cents per hour, and are now at $27.30.

The American Job Shortage Number, which tells how many additional positions we could absorb if it was common knowledge that about anyone could quickly get one, gained 76,000, as follows:

Compared with a year ago the AJSN is down 461,000, with 424,000 of that from lower official unemployment.  That share of the AJSN reached another pre-Great Recession percentage low, and is now at 33.1%, meaning that more than two-thirds of gains in employed Americans would come from those with other statuses. 

There’s not much to debate about October’s jobs report – it is very strong.  It especially bolstered the shakiest measures above, the employment-population ratio and the labor force participation rate, and everything else is solid.  The AJSN’s small gain came mostly from those wanting work but discouraged or not having looked for 12 months or more, and is probably an effect of the half-million drop in those claiming no interest.  Despite much recent ink on the chances of a recession, there is no sign of it here.  The turtle took another step forward.  

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