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Two Pictures from the September Employment Situation

Summary:
Consensus (Bloomberg) had been for +100,000 (range 0 to 140,000); print was -33,000. Figure 1: Nonfarm payroll employment, thousands, seasonally adjusted, from September release (blue), August (red), July (green), all on log scale. Source: BLS via FRED. Obviously, the hurricanes distorted the numbers, but consensus estimates should have taken the impact into account. Note that the last two months’ of data have been revised down. There is a slight deceleration in employment growth as a consequence. This is more apparent in Figure 2. Figure 2: Nonfarm payroll employment, seasonally adjusted, month-on-month growth rates (blue), and 3 month growth rate (red), all annualized, calculated as log differences. Source: BLS via FRED, and author’s calculations. Some deceleration is to be expected

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Consensus (Bloomberg) had been for +100,000 (range 0 to 140,000); print was -33,000.

Two Pictures from the September Employment Situation

Figure 1: Nonfarm payroll employment, thousands, seasonally adjusted, from September release (blue), August (red), July (green), all on log scale. Source: BLS via FRED.

Obviously, the hurricanes distorted the numbers, but consensus estimates should have taken the impact into account. Note that the last two months’ of data have been revised down. There is a slight deceleration in employment growth as a consequence. This is more apparent in Figure 2.

Two Pictures from the September Employment Situation

Figure 2: Nonfarm payroll employment, seasonally adjusted, month-on-month growth rates (blue), and 3 month growth rate (red), all annualized, calculated as log differences. Source: BLS via FRED, and author’s calculations.

Some deceleration is to be expected given the economy is at near full-employment. Hence, the question is how much deceleration was due to weather. IHS estimates hurricanes reduced employment by 249,000; that implies an underlying September increase of 216,000! Taken that way, the labor market remains strong.

Menzie Chinn
He is Professor of Public Affairs and Economics at the University of Wisconsin, Madison

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