Jobs Report and the Monthly Employment Growth Statistics

Where the 134,000 Jobs Were Added in September

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The U.S. economy gained 134,000 jobs in September 2018. The economy needs 150,000 new jobs each month to keep expanding. Even thought job growth was below the minimum, the Federal Reserve will probably continue raising interest rates at its future 2018 FOMC meetings. There will be another jobs report before the December meeting.

Where the Job Growth Came From

Health care added 29,800 jobs. The industry remained a strong performer even during the recession. Trump's health care plan initially dampened employers' confidence. The sector typically adds over 30,000 jobs a month.

Construction added 23,000 jobs.That's a good sign for the housing market. It means the real estate market is not going to crash anytime soon.

U.S. manufacturing gained 18,000 jobs despite of the strong dollar and Trump's trade war. A strong dollar hurts exports. Countries in a trade impose tariffs, cutting into international trade declines. Durable goods gained 17,000 jobs despite a loss of 400 jobs in auto manufacturing.

Pay close attention to how many manufacturing jobs are added or lost each month. This is a significant leading economic indicator. Factories add workers as soon as they receive a large enough order. It could take months or even years before the order ships and shows up in economic output. Manufacturing is a better indicator of recession than the service sector, whose job levels remain consistent through the boom-and-bust cycle.

The government added 13,000 positions. President Trump promised to streamline the federal government.

Financial activities gained 13,000 jobs. Banks are adding positions after the Fed began raising interest rates. Higher rates bring greater profitability to lenders because they can charge more for loans.

Temporary help services added 10,600 jobs. Companies often add temp jobs when business is picking up, but they aren't confident enough to add full-time positions.

The mining industry gained 5,000 jobs, spurred on by higher oil prices. Excess supply from U.S. shale oil producers is getting absorbed and OPEC agreed to limit its output. As a result, future oil prices are expected to rise. Utilities gained 100 jobs.

Wholesale, which usually follows retail, increased by 4,400 jobs.

Information services added zero jobs. This sector, especially Silicon Valley, is critical to American global competitiveness.

These Industries Lost Jobs

The retail industry lost 20,000 jobs. Store managers had been slashing jobs since March 2017. Online sales have been cutting into bricks-and-mortar store sales.

Leisure and hospitality lost 17,000 jobs. Most of these workers are hourly employees. This sector usually adds from 20,000 to 30,000 positions a month. But this decline is due to the end of the summer holiday season. In September 2017, the industry shed 75,000 positions.

The U.S. Jobs Report Explained

The monthly jobs report is also called the "Employment Situation Summary" and the "Non-Farm Payroll Report." It's a critical economic indicator because it's the first report of the month. It's also the most comprehensive and credible.

The Bureau of Labor Statistics surveys 160,000 non-farm businesses and agencies on the number of jobs, the wages paid and the hours worked. The jobs report will tell you which industries are adding jobs, whether American workers are working longer hours and how fast salaries are increasing. 

The jobs report also provides the unemployment rate. To get the number of unemployed individuals, the BLS must undertake a separate survey of households instead of businesses. This household report also includes workers' age, sex and race/ethnicity. The household survey has a more expansive scope than the establishment survey. That's because it includes the self-employed, unpaid family workers, agricultural workers and private household workers, who are excluded by the establishment survey. 

The household survey is not as accurate as the business establishment, though. It has a smaller sample size. That's why employment numbers are taken from the establishment survey. That's why the current unemployment statistics show a different trend than the jobs report.

There are two other jobs reports. The monthly ADP National Employment Report® is released on the first Wednesday of each month. It's produced by the ADP Research Institute, SM and Moody’s Analytics. It uses business payroll data to report on the number of jobs added in the private sector. It excludes farming (as does the BLS report) and, more important, government jobs (included in the BLS report). For that reason, it's considered incomplete.

The ADP Report is important though, because it's released the Wednesday before the BLS report. It gives some analysts an earlier view of what might happen in the Friday report. ADP is quick to say it's not intended to be predictive. Like the BLS report, it's revised as more data comes in later in the month. These revised numbers are 96 percent correlated with the revised BLS jobs report. 

The Department of Labor also releases a weekly jobless claims report. This measures the claims for initial unemployment benefits reported by each state every week. It also reports how many of the unemployed are still receiving benefits. This report gives an indication of trends, whether there are more or less unemployed than the week before. The main value of this report is that it is weekly and so it gives some idea of trends in between the monthly jobs reports. It isn’t accurate when predicting the monthly report because it is volatile.