September Unemployment Report Beats Forecast

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Forget the conspiracy theories, the September unemployment report was such a surprise because most analysts had failed to see the underlying strength in the economy in the past. This strength has been clearly visible to those who looked carefully. Corporate profits at record levels, corporate cash balances at record levels and interest rates historically low. That is a receipt for explosive growth. However, you cannot see it if you look only at the “Jobs Created” number, because that number shifts around from month to month. Look instead at the figures below.

THE UNEMPLOYMENT RATE HAS DECLINED SIGNIFICANTLY OVER THE LAST YEAR

  •  September unemployment  7.8%
  • one year ago: 9.0%
  • White unemployment rate  7.0%
  •  one year ago: 7.9%
  • Black unemployment rate   13.4%
  • one year ago: 15.9%
  • Latino unemployment rate   9.9%
  • one year ago: 11.3%

THE NUMBER OF NEW JOBS CREATED WAS REVISED UPWARD

This number will almost always change in a positive or negative direction for the first two months after it is released. Therefore, one should not put too much faith in one month’s number. For example, a big change occurred in the government sector jobs. occurred in the government sector jobs. Earlier reports indicated the government sector subtracted 28,000 jobs during July and August. Revisions indicate it added 63,000 jobs.

  •  September jobs created 114,000 (gains in healthcare and transportation)
  • August jobs created, 142,000: revised up from 96,000
  • July jobs created, 181,000: revised up from 141,000

 THE ECONOMY IS STRONG ACROSS THE BOARD, WORKERS ENTERED THE LABOR FORCE, THE NUMBER EMPLOYED INCREASED, THE NUMBER UNEMPLOYED DECREASED

  •  In September the labor force expanded 418,000 workers
  • In September, the number of workers employed increased by 873,000
  • In September, the number of unemployed workers decreased by 456,000

 WHY THE POSITIVE REPORT?

ECONOMIC INDICATORS WERE VERY POSITIVE OVER THE LAST MONTH, AND GAINS OCCURRED ACROSS THE BOARD, NOT JUST IN A FEW SECTORS

  • Unemployment claims went down
  • Domestic oil prices went down
  • Worker productivity increased
  • Personal spending went up
  • Auto and truck sales when asked
  • Consumer confidence increased
  • Purchasing managers index increased

Last modified: June 20, 2017

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