Lights On At BLS
I am hard pressed to recall an economic data event that is more laced with irony than this morning’s release of the jobs report for the pre-shutdown month of September. While leaving the obvious comments to others, I will note how good it is to see the talented staff at the Bureau of Labor Statistics (BLS) back on the job, generating their globally followed data on the plight of the American workforce. You have to wonder why they were off at all. This seems like an essential task to me.
Unfortunately, the September report does not offer further reason for celebration. Job growth, modest as it is, appears to be decelerating. Net gains in nonfarm payroll employment slowed significantly from 193,000 in August to a disappointing 148,000 in September. Average quarterly job growth has moderated consistently this year from 207,000 in the first quarter to 182,000 in the second quarter and 143,000 in the third. This is not exactly welcome news when the U.S. labor market is still about 1.8 million jobs shy of the January 2008 peak for nonfarm employment.
There are some glimmers of light. The housing rebound is clearly playing a role in strengthening construction employment, which grew by a nice 20,000 in September. A modestly improved global growth picture has turned five months of manufacturing job losses into two months of gains, although they were quite narrow in September. Unfortunately, all of this has only allowed for marginal improvement in the difficult long-term unemployment picture.
As manufacturers well know, labor supply is almost as much of an issue in this frustrating post-crisis period as labor demand. The labor force participation rate, a measure of the share of the working age population that is either employed or seeking employment, was unchanged in September, perhaps the beginning of a bottom in what has been a seemingly endless fall that has taken it to a 34-year low. Part of this is a structural decline that began around 2000, somewhat catalyzed by demographic forces that are now making aging an element of the U.S. labor dynamic. Nonetheless, with consistent albeit very sluggish job growth it is reasonable to expect at least some cyclical recovery in participation. This is one phenomenon that labor economists really need to study.
Welcome back to the office for the BLS crew. We need them to join us in thinking about our considerable challenges.