November 1, 2024

Payroll employment rose of just 12 thousand in October after having climbed 223 thousand in September and 78 thousand in August.  In addition to the smaller-than-expected increase in payroll employment in October, the August and September increases were revised downward by 112 thousand.  Thus, the employment gains were smaller than expected throughout the summer months.  In the past three months the average increase has been 104 thousand.  But this is a particularly hard report to assess because Hurricane Milton may have biased the data.  The Labor Department suggested that payroll employment in some industries may have been affected by Hurricane Milton, but it declined to make any estimate of the impact on national employment or hours worked.  Our sense is that jobs still seem to be climbing roughly in line with growth in the labor force which suggests that the labor market should be relatively stable in the months ahead.

In addition to hiring workers employers can also alter the length of the workweek for their existing workers.  The nonfarm workweek  was unchanged in October at 34.3 hours which is the same as it was in August and September. Prior to the recession the nonfarm workweek was averaging 34.4 hours so it is marginally weaker than it was four years ago.  So while the labor market has softened it does not appear to be falling out of bed.

Job openings have fallen from a record high level of 11.7 million in early 2021 to 7.4 million.  Prior to the recession there were about 7.0 million job openings per month versus 7.4 million currently. Today there are 1.1 job openings for every unemployed worker which is roughly where this was prior to the recession.

The change in employment and hours worked are reflected in the aggregate hours index which was unchanged in October at 116.7 after  having risen 0.1% in September. This index rose 0.5% in the third quarter compared to an increase in GDP growth in that quarter of 2.8%.  This suggests that productivity probably increased 2.3%  or so in that quarter.  We now have data for October and it appears to use that aggregate hours worked are likely to increase 1.0% in the current quarter which, given a further increase in productivity, should lead to about 2.5% GDP growth in the fourth quarter.

Construction employment rose by 8 thousand.   Manufacturing employment declined 46 thousand.  Retail trade jobs fell 6 thousand.  Transportation and warehousing declined by 4 thousand.  Info tech jobs rose 3 thousand.  Financial sector jobs were unchanged.  Professional and business services declined 47 thousand (exclusively in the admin and support services category).  Health care jobs climbed by 52 thousand.   Social assistance declined 1 thousand.  Leisure and hospitality jobs fell 4 thousand.    Government jobs rose by 40 thousand almost exclusively at the state and local level.

GDP growth was 2.8% in the third quarter and we expect 2.5% growth n the fourth quarter.

Stephen Slifer

NumberNomics

Charleston, S.C.