JOBS | Average Increase Nov-Jan, 192,000

Nonfarm Payroll (BLS)

Total nonfarm payroll employment rose by 200,000 in January. However, the net increase in total nonfarm payroll employment was revised down for November-December:

• The November increase was revised down from 252,000 to 216,000.
• The December increase was revised up from 148,000 to 160,000.
• The net change was that gains in payroll jobs in November and December combined were 24,000 fewer than previously reported.
• After revisions, job gains averaged 192,000 per month over the last 3 months. A moving average is more reliable for payroll job changes. Each month, prior data is revised based on additional reports and recalculation of seasonal factors. Noise in the reported numbers is especially likely during the annual BLS benchmark process at the end of each  year.

Employment continued to trend up in construction, food services and drinking places, health care, and manufacturing:.

• Construction added 36,000 jobs in January, with most of the increase occurring among specialty trade contractors (+26,000). Employment in residential building construction continued to trend up over the month (+5,000). Over the year, construction employment has increased by 226,000.

• Food services and drinking places employment continued to trend up in January (+31,000). The industry has added 255,000 jobs over the past 12 months.

• Health care continued its long and steady record of adding jobs in January (+21,000), with a gain of 13,000 in hospitals. In 2017, health care added an average of 24,000 jobs per month.

• Manufacturing continued to add jobs (+15,000). Durable goods industries added 18,000 jobs. Manufacturing has added 186,000 jobs over the past 12 months.

• Other major industries were little changed, including mining, wholesale trade, retail trade, transportation and warehousing, information, financial activities, professional and business services, and government.

The average workweek for all employees on private nonfarm payrolls declined by 0.2 hour to 34.3 hours in January. In manufacturing, the workweek declined by 0.2 hour to 40.6 hours, while overtime remained at 3.5 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls edged down by 0.1 hour to 33.6 hours.

In January, average hourly earnings for all employees on private nonfarm payrolls rose by 9 cents to $26.74, following an 11-cent gain in December. Over the year, average hourly earnings have risen by 75 cents, or 2.9 percent. Average hourly earnings of private-sector production and nonsupervisory employees increased by 3 cents to $22.34 in January.

The January unemployment rate was 4.1 percent for the fourth consecutive month. The number of unemployed persons was 6.7 million, changed little over the month. Full data are at www.bls.gov. Among major worker groups, the unemployment rate for Blacks increased to 7.7 percent in January, and the rate for Whites declined to 3.5 percent.

In January, 1.7 million persons were marginally attached to the labor force, little changed from a year earlier. (The data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey.

Among the marginally attached, there were 451,000 discouraged workers in January, little changed from a year earlier. (The data are not seasonally adjusted.) Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. The remaining 1.2 million persons marginally attached to the labor force in January had not searched for work for reasons such as school attendance or family responsibilities.

September Job Numbers

The stock market rose significantly today on the much-awaited September employment situation release from BLS, which said: "Nonfarm payroll employment rose by 110,000 following increases of 93,000 in July and 89,000 in August (as revised)." These figures are not such a drop from the first half of 2007 as was previously reported. The markets were pleased.

But the "as revised" parenthetical comment refers to a major swing in the August numbers. The BLS's August employment situation release had reported a decline of 4,000 jobs, and the revision is to a growth of 93,000 jobs. What happened?

Philip Rones, the Acting U.S. Labor Commissioner, in his accompanying statement reports the revision as follows: "The estimates of payroll employment change for July and August were revised upward. The July change rose from +68,000 to +93,000 and the August change from -4,000 to +89,000. After incorporating these revisions, average monthly job growth for June through September is 90,000,compared with an average of 147,000 for the first 5 monthsof the year. Nearly all of the August revision reflected an upward adjustment to government employment, particularly local education. As noted last month, employment estimates for local government education can be volatile, particularly during the summer months. Initial estimates of employment in local education typically are based upon a smaller percentage of survey responses than in other sectors. This lower initial response can make estimation more problematic in months when school sessions begin and end."

Agora Financial in its 5-minute report today isn't satisfied with this explanation and wonders whether the preliminary August numbers somehow landed on the weak side to help justify the September 18 cut in the Fed's target rate by 50 basis points. With such a large revision, the question is inevitable. Future revisions will surely be watched closely.