Strong Job Growth, Big Revisions Send US Unemployment Below 6 Percent
The US unemployment rate fell to 5.9 percent in September, dropping below 6 percent for the first time in more than six years. The decrease was powered, in part, by strong growth of payroll jobs. Payroll jobs increased by 248,000 in September, well above the average for the year to date. In the same report, the BLS revised the weak August job gain upward from 142,000 to 180,000, and the July gain from 212,000 to 243,000.
In addition to the standard unemployment rate, the BLS also publishes a broader measure of labor market distress known as U-6. That measure takes into account discouraged workers, others who are marginally attached to the labor force, and people who are working part time but would prefer full-time work. U-6 decreased to 11.8 percent in September, also a six-year low. The unemployment rates are based on a survey of households that differs in several respects from the survey of employers from which payroll job numbers are drawn. According to the household survey, total employed workers increased by 232,000 in September while the number of unemployed decreased by 329,000. The civilian labor force decreased by 97,000, and the employment population ratio was unchanged.
The Great Recession and the slow recovery from it have been characterized by unusually high levels of involuntary part-time employment, or, to use the official term, persons working part-time “for economic reasons.” Those include people whose employers have cut their hours and those who have taken part-time jobs even though they would prefer to work full time. As the next chart shows, involuntary part-time employment fell to a new low for the recovery, but it remains elevated by historical standards. Meanwhile, the number of people voluntarily working part-time, that is, for what the BLS calls “non-economic reasons,” increased by 35,000 in September. Those include people who work part-time for reasons like childcare problems, family or personal obligations, school or training, retirement or Social Security limits on earnings, and other reasons. Realistically, the decisions of these people to work part time are motivated to some degree by economic considerations, so the BLS term is somewhat of a misnomer.
Today’s report, taken as a whole, shows that the job market finished the third quarter with steady gains. That reinforces the expectation that the advance report on third-quarter GDP, to be released at the end of October, will show continued growth, although likely less than the 4.6 percent rate of Q2.
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