U6 Fix
November 5, 2021
No Tricks, There’s Treats
Private-sector payrolls rebounded from a more modest gain in September, showing broad-based gains across goods and service-producing industries. State and local education hiring remained sluggish, but that effect appears to be diminishing through the fall. Labor force participation is still stubbornly below pre-pandemic levels, but employers nevertheless added over half a million workers to their job rolls.
Employment growth rebounded in October, with employers adding 531,000 jobs to payrolls last month. Private-sector payroll gains again outpaced headline employment growth, with U.S. businesses adding 604,000 workers to new jobs. Gains were broadly based – the private industry diffusion index reached 71.8 – with goods-producing industries adding 108,000 jobs and service-sector industries adding 496,000 jobs. Manufacturing lead the gains among goods-producing industries, with 60,000 new jobs followed by construction, which added 44,000 jobs. Among service-industries, leisure and hospitality saw the most employment growth with 164,000 new workers added to farm payrolls, followed by 100,000 new workers in professional and business services. Government payrolls fell largely due to slow hiring of state and local teachers, particularly relative to seasonal patterns. The labor market has now recovered 81 percent of the more than 22 million jobs lost in March and April of 2020.
The unemployment rate fell by 0.2 percentage points to 4.6 percent. The household survey showed a 359,000 gain in the number of employed workers. The labor force added a modest 104,000 workers keeping the labor force participation steady at 61.6 percent, still the lowest labor force participation rate since January of 1977 (prior to the pandemic). Since February 2020, the labor force is down 3.0 million workers, while the labor force participation rate remains 1.5 percentage points below the average that prevailed for the year prior to February 2020.
The unemployment rate dropped for all education levels but only some races. By race, it dropped the most for Hispanics, by 0.4 percentage points. Whites dropped 0.2 points. There was no change for Blacks and Asians. By education, it dropped most for those without a high school diploma, by 0.5 percentage points. High school graduates saw the unemployment rate drop 0.4 points. Both those with some college and those with a bachelor’s degree or higher saw their rate decrease by 0.1 points.
Average hourly earnings increased 11 cents, reflecting a 4.9 percent yearly gain. Disentangling compositional effects from these measures, particularly as observers are monitoring the nominal wage pressures, from inflation will continue to be a challenge. Average hourly earnings for production and non-supervisory workers similarly increased, showing a 10-cent gain and a 5.8 percent gain over the year.
Data junkies here’s your fix: The October U-6 (the broadest measure of unemployment) fell 0.2 percentage points to 8.3 percent due to the decline in the regular unemployment rate.
