Friday's jobs report was weird: Nonfarm payrolls rose 261k in October, 66k above consensus, and job gains were revised higher in September...
But the unemployment rate jumped to 3.7%, even though the participation rate (total number of available workers within the overall population) went down.
So.... Jobs have been created, there are fewer available workers, yet unemployment is higher? Make it make sense...
It's not uncommon for the jobs reports to be a minefield, especially when the economy's in a transition phase rather than a trend phase.
Post GFC, jobs were being lost every month, nothing else mattered.
As economies reopened after Covid, jobs were being added every month. Nothing else mattered.
Now we're expecting job losses. Job gains are slowing but the data's pretty ambiguous. No clear trend.
The Fed keeps hiking, the economy keeps slowing and we're seeing headlines about layoffs constantly. Especially in tech... Nearly 165,000 layoffs globally in 2022 👇
That list is set to grow again once Zuck cuts his workforce down to size...
Basically, there's a load of counteracting forces right now. Although tech companies are undoing their massive hiring binge, it's not creating a surge in unemployment.
Just change industry bro. The BLS reckons there's almost 2 million job openings in professional and business services...
It's pretty insane. Finance companies are laying people off too, but apparently there are still 10 million job openings in the US of A...
In theory, people can simply change industries. Transferable skills and all that. If you can write code for Twitter, you can do the same for a healthcare company... or anyone to be honest.
Probably won't get to do those "day in the life of" TikToks though...
Which brings us to the quality/quantity debate. The total number of jobs can change without telling us anything about the quality of those jobs.
That's not just abut the perks, but also if the jobs are full or part time. 👇
- Involuntary Part-Time Work: -183,000 to 3,660,000
- Voluntary Part-Time Work: +41,000 to 21,274,000
- Total Full-Time Work: -433,000 to 132,228,000
- Total Part-Time Work: +164,000 to 26,394,000
Everything points to part time jobs to fueling the job gains.
Which sort of puts a spanner in the works of the strong labour market narrative.
Zerohedge put that same trend into further context 👇
In fact, as shown below, since March, the US has lost 490K full-time employees offset by an almost identical gain of 492K part-time employees, while 126K workers were forced to get more than one job over the same period.
On top of this, the establishment and household surveys are heading in completely different directions 👇
Household Survey Data: The unemployment rate increased by 0.2 percentage point to 3.7 percent in October, and the number of unemployed persons rose by 306,000 to 6.1 million. The unemployment rate has been in a narrow range of 3.5 percent to 3.7 percent since March.
Establishment Survey Data: Total nonfarm payroll employment increased by 261,000 in October.
Goldman reckon it's largely down to residual seasonality in the employment sector (especially janitors and support staff) but that's really boring. This is the trend that matters 👇
Regardless of the precise pace of employment growth in October, the broader set of employment data suggest that job growth has slowed and will continue to slow: job openings and quits are declining, the ISM employment indices in manufacturing and services have fallen to neutral or contractionary levels, and many publicly traded companies have announced hiring freezes.
Sums it up pretty well. Gradually, the power of labour to push for higher wages will weaken, and if current trends continue, consumers will keep consuming and piling on debt regardless...
Keep an eye out for the latest consumer credit data from the Fed due out later today. Employment slowing just as revolving debt (credit cards etc) rises back to the pre-pandemic share of income is less than ideal.
Still my favourite framework 👇