Friday, November 5, 2010

USA Unemployment Rate Continues at 9.6% in October (Charts, Review) *New jobs +151K, first increase since May*

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Bureau of Labor Statistics: September Employment Situation Summary


USA Unemployment Continues at 9.6% in September

Official Statement The U.S. Bureau of Labor Statistics reported, "Nonfarm payroll employment increased by 151,000 in October, and the unemployment rate was unchanged at 9.6 percent, the U.S. Bureau of Labor Statistics reported today. Since December 2009, nonfarm payroll employment has risen by 874,000."
 
Unemployment Rate (Chart) The unemployment rate (U-3) continued at 9.6% in October, no change from August and September. The rate peaked during the USA Great Recession in October, November, and December 2009 at 10.1%, 10.0%, and 10.0% respectively. The low subsequently has been 9.5% in June and July 2010. The chart below shows the latest 36 months (3 years) of the monthly unemployment rate.
 

 
Total Nonfarm Employment (Chart) Total nonfarm employment increased +151,000 (preliminary) in October, the first increase since May. The total  nonfarm  employment job losses peaked during the USA Great Recession at -779,000 in January 2009. The best jobs gains subsequently has been +432,000 in May 2010. The net jobs gain for 2010 has been +874,000, compared to net job losses of 3,623,000 and 6,096,000 in 2008 and 2009, respectively. Although the October gain in jobs is positive data, the 2010 net gain in jobs is overshadowed by the net job losses in 2008 and 2009. The chart below shows the latest 36 months (3 years) of monthly changes in total nonfarm employment. Total nonfarm employment is private sector plus government sector jobs.



Private Sector Employment (Chart) Private sector employment increased +159,000 (preliminary) in October, the 10th consecutive month of increases. Private sector employment job losses peaked during the USA Great Recession at -806,000 in January 2009. The best jobs gains subsequently has been +241,000 in April 2010. There has been a net jobs increase of +1,115,000 for 2010 YTD, compared to net job losses of 3,807,000 and 6,053,000 in 2008 and 2009, respectively. Although the October gain in jobs is positive data, the 2010 net gain in jobs is overshadowed by the net job losses in 2008 and 2009. During the depths of the Great Recession, there was a dismal 22 consecutive months of job losses from January 2008 through October 2009 and 23 of 24  months through December 2009. The chart below shows the latest 36 months (3 years) of monthly changes in private sector employment.


Government Employment (Chart) Government employment decreased -8,000 (preliminary) in October, the 5th consecutive month of decreases. Government employment job losses reached at cyclical peak recently at -236,000 in June 2010. The best jobs gain was the previous month +381,000 in May 2010. The BLS has attributed this jobs gain and loss mostly to the 2010 Census. There has been a net jobs decrease of -241,000 for 2010 YTD, compared to a net job gain of +184,000 and net job loss of -43,000 in 2008 and 2009, respectively. The October gain is the least net  jobs loss in the latest 5 months. The chart below shows the latest 36 months (3 years) of monthly changes in government employment.



Total Unemployed Total unemployed increased +76,000 to 14,843,000 in October. The total unemployed peaked during the USA Great Recession in October 2009 at 15,612,000. The low subsequently has been 14,599,000 in July 2010. The chart below shows the latest 36 months (3 years) of the total unemployed.



Underemployment Rate The underemployment rate (U-6) decreased -0.1% to 17.0% in October. The rate peaked during the USA Great Recession in October, November, and December 2009 at 17.4%, 17.2%, and 17.3%, respectively. The low subsequently has been 16.5% in January, June, and July 2010. The chart below shows the latest 36 months (3 years) of the monthly unemployment rate.



Commentary The October increase total nonfarm employment (preliminary) of +151,000 is the first net jobs gain since May and after 4 consecutive monthly net job losses. This indicates the economic recovery has not stalled, but is not accelerating at an adequate pace. As can bee seen from the charts above, the employment situation is not trending significantly better or worse, just muddling along. This indicates the USA GDP growth rate is very low, certainly less than +3% and most likely at or just under +2%, between +1.5% and no higher than +2.25%. The USA GDP is reviewed here (USA Q3 GDP Advance Estimate +2.0% (Charts) *Positive contribution from consumer spending*).

Net Jobs Gain in 2010 After 5 consecutive months of net employment gains (January through May 2010), there were 4 consecutive months of net employment losses (June through September 2010), and now an October net jobs gain. This results in a net jobs gain in total nonfarm employment of +874,000 in 2010. Private sector employment has increased every month in 2010, for 10 consecutive months, for a net jobs gain of +1,115,000 in 2010. Government sector employment has decreased 5 consecutive months and 7 of the 10 months in 2010 for a net jobs loss of -241,000 in 2010.

Cost of the Great Recession Although there has been a net jobs gain in total nonfarm employment of +874,000 for 2010 YTD, this is not enough to bring down the unemployment and underemployment rates. The USA is not creating jobs fast enough, period. This also does not even begin to recover the net jobs lost in 2008 and 2009 of -3,623,000 and -6,096,000, respectively. Private sector employment has had a net jobs increase in 2010 YTD of +1,115,000, which is encouraging. However, when compared to the private sector jobs lost in 2008 and 2009 of -3,807,000 and -6,053,000, this is not enough increase to-date. The government sector employment gained +184,000 jobs in 2008, lost -43,000 jobs in 2009, and has lost -241,000 iin 2010 for a net jobs lost of -100,000.

Revisions The August total nonfarm employment monthly change was revised upwards to -1,000 from -57,000. The September total nonfarm employment monthly change was revised upwards to -41,000 from -95,000. These changes resulted from an upwards revision of the August private sector employment monthly change to +143,000 from +93,000 and government sector to -144,000 from -150,000. September private sector employment was revised upwards to +107,000 from +64,000 and government sector employment was revised upwards to -148,000 from -159,000.

Weekly Unemployment Claims Weekly unemployment insurance claims have hovered in the 450,000 area, to remain above 400,000 and below 500,000. This also indicates the USA economy is not growing adequately for significant jobs growth. Weekly unemployment insurance claims are monitored, charted, and reviewed on the Weekly Unemployment Claims page..



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