Today’s jobs report showed persistent but modest improvement in the American economy, and broad-based gains in just about every industry except the government. The U.S. economy added an average of only 67,000 jobs a month in the second quarter but has added an average of 170,000 the past three months.
NOTE: The impact of Hurricane Sandy was not included in this report, though most economists do not expect the hurricane to have a major impact. The job disruptions are expected to be canceled out by those employed by the recovery efforts.
WHERE THE JOBS ARE:
- Job creation was strongest among retailers, which added 36,000 jobs.
- Health care added 32,500 jobs.
- Leisure and hospitality employers added 28,000 positions.
- The construction industry reported a gain of 17,000 jobs, an improvement that reflects a rebound in the housing industry.
- Manufacturing employment changed little in October. Net manufacturing employment has shown little change since April.
- Interestingly, the only sector to lose jobs is government. State government accounts for a big chunk of these losses.
THE BAD SIGNS:
- There are still 12.3 million unemployed persons in the country (just about the population of the state of Pennsylvania).
- Over the past 12 months, average hourly earnings have risen by 1.6 percent. Yet inflation is up 2 percent over the past year. That means worker take-home pay is declining. (Source: James Pethokoukis, American Enterprise Institute.)
- The number of long-term unemployed (those jobless for 27 weeks or more) was little changed at 5.0 million, accounting for 40.6 percent of the unemployed.
- Employment growth has averaged 157,000 per month so far in 2012, about the same as the average monthly gain of 153,000 in 2011.
- Unemployed workers have now been looking for jobs for 40.9 weeks on average, a mark that has gotten slightly worse over the past year, according to the Wall Street Journal.
- We are now 41 months into the recovery, and we have recovered just 55 percent of the 8.9 million lost private sector jobs from the Great Recession. (James Pethokoukis, American Enterprise Institute.)
THE GOOD SIGNS
- Lots of signs recently that consumer attitudes are improving and today’s report validates that data.
- Housing is finally showing some improvement which has been an important boost for the economy, we see this in construction jobs.
- Private jobs are expanding despite all concerns about the fiscal cliff.
HOW CAN WE ADD 171,000 JOBS but unemployment goes up?
The two numbers come from separate reports. The number of jobs added comes from a survey of businesses, while the unemployment rate comes from a survey of U.S. households. The two reports often move in tandem, but can move in opposite directions from month to month.
One big factor here is known as the Labor Force Participation Rate. The unemployment rate ticked up in part because more people threw their hats in the ring and started looking for work. This is an encouraging sign for the economy.