A Strong Jobs Report Gathered Before the Interest Rate Cut, with AJSN Showing Latent Demand Almost a Million Lower

Commentary I read before this morning’s Bureau of Labor Statistics Employment Situation Summary’s release said that it would be a critical installment, mainly because of the effect it would have on the Federal Reserve’s two remaining 2024 interest rate decisions.

It turned out to show real improvement.  The number of net new nonfarm payroll positions exceeded its 150,000 consensus estimate with 254,000.  Seasonally adjusted unemployment dropped another 0.1% to 4.1%, the same place it was three months before.  There were 6.8 million unemployed people, down 300,000, and the unadjusted rate fell from 4.4% to 3.9%, some but not all due to seasonality.  The count of people working part-time for economic reasons, or keeping such jobs while thus far unsuccessfully seeking longer-hours ones, erased the last report’s 200,000 gain, going back to 4.6 million.  Those officially unemployed and looking for work for 27 weeks or longer, though, gained 100,000 to 1.6 million.  The unadjusted number of employed grew 700,000 to 162,046,000.  The two best measures of how many people are working or one step away, the employment-population ratio and the labor force participation rate, gained 0.2% and stayed the same to reach 60.2% and 62.7%.  Average private nonfarm payroll earnings increased 15 cents, almost double the effect of inflation, to $35.36.  More people continued to leave the labor force, with those claiming no interest gaining almost 600,000 to add to last time’s 1.3 million, reaching 94,920,000.

The American Job Shortage Number or AJSN, the Royal Flush Press measure showing how many additional positions could be quickly filled if all knew they would be easy to get, lost 980,000, as follows:

The effect of fewer people officially jobless was responsible for 800,000 of the drop, and those interested but not looking for a year or more cut off another 340,000.  Gains in the second through sixth categories above offset that by 150,000.  The share of the AJSN from those unemployed fell 2.6% to 35.3%.  Compared with a year before, the AJSN has increased 433,000, almost exactly that amount from those officially unemployed. 

What happened here?  Still many more new positions than we can expect, and that along with continued workforce departures assured our unemployment-rate’s lowering.  The job market is healthy, but hardly overheated.  That means the Federal Reserve ball will go back to the inflation court, and then back to the next jobs report on November 1st, five days before the next Fed meeting starts.  We are very much in the hunt for another quarter-point decrease, but more than that, considering the progress above, is less likely.  The turtle did, this time, take a moderate step forward.