Friday, October 7, 2011

Jobs increase more than expected


The September jobs report was much better than expected, and upward revisions to past data wiped out the much-touted "zero" jobs number that was reported last month. But the best that can be said for private sector jobs is that they are growing at the rate of about 1% a month, and that's not enough to bring the unemployment rate down (it remained at 9.1%), nor is it enough to make anyone excited. But at least it refutes (as have lots of numbers of late) any notion that the economy is slipping into another recession.

Private sector jobs rose by 137K (vs. the 90K expected), according to the establishment survey. The household survey, in contrast, reported a very large addition of 412K jobs—which in the chart above you can see is basically "payback" for very large job losses in prior months. When you abstract from the monthly noise in both these series, you end up with growth that has been running somewhere in a annualized range of 0.7% to 1.4%. Call it 1.0%, or about 120K per month over the past two years. Not impressive, but nothing like a recession.


This chart shows that one of the healthiest features of this recovery continues: the public sector continues to lose jobs—about 600K since the recovery began. This is the most extended and the largest decline of public sector jobs since the 1980-82 recession. It is contributing to the unusually high and sticky unemployment rate, of course, but this is a good problem to have since the public sector had grown like Topsy in the years leading up to the last recession and needed to be cut back. A smaller public sector will eventually make it easier for the more-efficient private sector to grow.

Given the degree of pessimism embedded in the market (see yesterday's post for the gruesome details), today's jobs report should equate to a sizable positive shock. It shows the economy is still on a sustainable growth path, and growth is an important source of stability when the solvency of large borrowers (i.e., the PIIGS) is in question. The world as we know it is not even close to coming to an end.

9 comments:

brodero said...

the PIIGS problem is solvable...bankwise,,,did you see
this from Reuters...http://graphics.thomsonreuters.com/11/07/BV_STRSTST0711_VF.html

Dr William J McKibbin said...

Cuts in public sector jobs is definitely a good trend -- those still in the public sector should consider transitioning into the private sector -- I would not be surprised to see public sector jobs drop sharply during the coming decade -- if the public sector applied the same efficiencies as the private sector, government employment could be cut to half its current level -- add privatization to the mix, and as many as 90% of all government jobs could be eliminated -- in my opinion, only uniformed workers should remain in government employment -- any job not requiring a uniform (including teachers) should be privatized -- all political jobs should be made volunteer positions (meaning that only the successful elders of our society should even consider running for office) -- again, the government should be working much harder at cutting 90% of its payroll in the coming years...

Scott Grannis said...

brodero: That's a very interesting website, thanks for highlighting it. The numbers look so small that I am having trouble believing they are accurate or that maybe they are leaving out something. Hmmm

Benjamin said...

Still huge number of public jobs to be eliminated, from Defense, Homeland Security, the VA and the USDA.

Department of Defense 3,000,000
Veterans Affairs 275,000
Homeland Security 250,000
Treasury 115,000
Justice 112,000
Energy 109,000
USDA 109,000
Interior 71,000

Labor 17,000
HUD 10,000
Education 4,487

I sense most jobs are being cut at state and local level, not federal. Sadly, I don't think a party change will result in a meaningful decrease in federal employment--when an agency employs 3 million voters, and a few million more in the private contracting side, getting real cuts will be tough.

And the USDA dispenses direct money into rural districts---those Congressman are going to fight like devils to protect their lard. $32 billion to cotton farmers in direct outlays (subsidies) since 1995. Not tax subsidies--checks you can cash for money.

But, nice to see public payrolls decline, The time bomb of public pensions is even worse---many uniformed federal employees can retire after only 20 years of service at full pension and extravagant medical benefits.

My guess is that the above topics have not been addressed at any Tea Party event. Perhaps by Ron Paul, my personal fave, but no one else.

brodero said...

In an attempt to come up with the
IMF 200 billion euro shortfall...
I applied a 7.5% core tier 1 capital ratio...with haircuts of 60% for Greece,50% for Ireland 50%
for Portugal,20% for Italy and 20%
for Spain...these haircuts I believe are extreme except for Greece.

Dr William J McKibbin said...

Federal employment needs to be ended for all but uniformed workers -- a Federal uniform would allow citizens to easily recognize who is a public servant -- many jobs can easily be converted into uniformed positions, including FBI agents, Federal Marshals, and Veterans Administration employees (who can wear Public Health Service uniforms) -- all politicians should be required to work as volunteers, or wear the uniform of some uniformed government agency from which they draw pay -- no exceptions to the uniform rule -- once people find out that they are required to wear uniforms to work for the government, they will seek jobs in the private sector instead -- only devoted public servants should be provided the privilege of wearing a Federal uniform -- being able to spot every public servant from a distance is also a major advantage of this idea -- of course, many jobs would have to be privatized, including teachers -- Federal employment needs to be cut by 90% in the next decade...

Dr William J McKibbin said...

PS: Yes, even lawyers working for the government should be required to wear uniforms -- black robes would suffice -- I am arguing for zero exceptions to this rule -- none whatsoever...

Dr William J McKibbin said...

PPS: All government workers should also be required to address non-government employees as "Mr" and "Mrs" as well -- the new civil service in my vision would be a corps of devoted public servants would work tirelessly for the public despite the low pay and benefits, much like ministers and Salvation Army workers -- again, the Federal payroll needs to be cut by 90% as soon as possible...

Squire said...

Private Sector payrolls (which doesn't include farm or government)is the only important figure.

# employed peaked in 2007 at 116 million. This included massive mortgage & financial services jobs and overflow bubble service jobs.

# employed peaked in 2000/01 at 112 million. This included massive phoney tech jobs.

Those phoney jobs in 2007 and 2001 are not coming back so 110 million jobs seems like a normal amount for the economy at this time.

Guess what? We are there at 110 million employed private sector jobs.