Friday, October 2, 2020

September’s Economic Data: Unemployment Down to 7.9% with AJSN Showing Latent Demand for 1.3 Million Fewer Jobs, Both Good Numbers with Coronavirus Cases Declining

In some ways, today’s Bureau of Labor Statistics Employment Situation Summary may seem disappointing.  The number of net new nonfarm positions, at 661,000, missed its 850,000 published projection.  Seasonally adjusted unemployment fell only 0.5%.  The labor force participation rate, now 61.4%, dropped for the first time since April, and the employment-population ratio improved only 0.1% to 56.6%.  Average hourly private nonfarm payroll earnings held at $29.47, meaning that those with lower pay rates have generally not been those returning to work, and the number of people jobless for 27 weeks or longer, now including those from the pandemic’s beginning, jumped 800,000 to 2.4 million. 

However, one thing was excellent.  The 7-day weighted average of new daily Covid-19 cases fell, from August 16th to September 16th, from 51,603 to 39,964, over 24%.  That means those 661,000 positions were not gained by tolerating more infections.  Other positive outcomes included unadjusted unemployment, down 0.8% to 7.7% (more than the adjusted rate improved, since many go back to work in September), the count of jobless down 1,000,000 to 12.6 million, those on temporary layoff diving from 6.2 million to 4.6 million, and the number working part-time for economic reasons, or looking thus far unsuccessfully for full-time work while keeping some with shorter hours, off 1.3 million to 6.3 million.

The American Job Shortage Number or AJSN, the metric showing how many additional positions could be quickly filled if all knew they were generally easy to get, while 7.8 million higher than a year before, improved substantially to the following:

Almost all the AJSN’s 1.3 million improvement came from lower official unemployment.  The counts of those marginally attached to the labor force, in the second through seventh rows above, fell only about 100,000, the least progress in five months.  The share of the AJSN from those officially jobless is again under 50% at 48.1%.  The AJSN is now 11.3 million below its April pandemic high, over halfway to its best early 2020 result.

What should we make of this morning’s findings?  People seem to be adjusting to the pandemic, including leaving the labor force – over 1.2 million more reported no interest in working than in August – or staying on its edges, if they are not optimistic about their working prospects.  That means the unemployment rates understate more than usual.  But even if we factor them up, we are left with a good jobs gain combined with real coronavirus progress.  That is the combination we need, even if it is slower than we might hope for.  The turtle, then, took another solid step forward.

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