The Labor Situation

Last Friday, as the non-stop insults between the presidential candidates continued to fly, the BLS released the most recent ‘Employment Situation‘.   While the official unemployment rate remained little changed, there was a bit of surprising data hidden within.

Why you Should Care:   If the employment situation improves too quickly, the FED may kick-off a series of rate hikes.   That didn’t happen.  But we did see improvement.

Taking Action:   Rest assured, I’m watching the data closely.  Nothing to do at this moment but stay informed.

The BLOG:   As we know, every month, on the first Friday of the month, the BLS releases new employment data.    Frankly, for the most part, the report contained little new data.  The ‘official’ unemployment rate moved down to 4.9% – the same rate we saw in August, but 0.1% lower than September.   At the same time, the ‘participation rate’ edged down 0.1%, as the labor force shrunk slightly.  Again, all in all, not really news.

The real news was hidden in Table A-15, described as “Alternative measures of labor underutilization,” the chart I feel more accurately represents the true unemployment rate, a measure called U-6.

U-6, in simple terms, is the sum of the folks ‘officially’ unemployed plus those who find themselves without the job the really want, for a variety of reasons.  Here’s the chart:

Note the move from 9.7% down to 9.5% in the ‘seasonally adjusted’ number.   OK, I know, perhaps I shouldn’t be getting too excited.  But this does indicate improvement in a metric that’s been long stuck in the high 9s.

Let’s see what December brings…but this is a positive sign for the employment situation.  A continued, steady improvement in the number of folks employed is a good thing for the US.  Slow and steady improvement is definitely what we want.

• Terry Liebman