The Week in Review: October 11, 2021
Plenty of Job Openings, Slow Payroll Growth
Nonfarm payrolls grew by just 194,000 in September, according to the U.S. Bureau of Labor Statistics (BLS). It was well short of an expected 500,000, per Bloomberg News.
While August’s sharp slowdown from July could have been viewed as a fluke, September confirms that hiring has slowed. August was revised to 366,000 from 235,000—good news.
Meanwhile, the private sector created 317,000 jobs last month vs. 332,000 in August. Last month’s gain in the private sector eases some of the sting from the headline number. A decline in government education jobs was responsible for the overall drop, but seasonal factors seem to muddy the adjustments, according to the U.S. BLS.
Without going into mind-numbing detail, education jobs actually went up last month, but rose less than they normally would in September—hence the decline after seasonal adjustments.
Still, firms are eager to hire. Job openings are at a record high, per BLS data. Yet, many who left the labor force during the pandemic have not returned.
Observers are puzzled why so many folks are staying at home. Look at what’s happened to the labor force participation rate. It fell sharply between February 2020 and April 2020—no surprise. While it has rebounded, it remains far short of the pre-COVID peak.
We also saw a more pronounced decline during the 2008 financial crisis. The rate never returned to its 2007 high.
It’s too early to say that the end of generous jobless benefits isn’t having the desired effect. The nonfarm payroll survey was taken about one week after benefits in the remaining states that offered them ended.
Still, the recent slowdown doesn’t appear to be a fluke. Even restaurants, which are desperate for workers, added just 29,000 positions. Given the huge number of job openings, private-sector growth of roughly 300,000 per month in August and September is barely respectable.
Today’s problem seems more to do with why the unemployed are being extra choosey about taking jobs (virus fears, hangover from generous jobless benefits?) and why some have simply stopped looking for work, which means they aren’t counted in the labor force.
In some cases, open positions that require professional expertise are harder to come by. Others chose early retirement. Nonetheless, those who worked in entry-level services jobs aren’t jumping at openings.
What seems certain: the large number of job openings is hampering economic growth.
If you have any questions or concerns, please don’t hesitate to let me know.
Two for the Road
1. Congress has raised or suspended the debt ceiling 78 times since 1960. — Cnet, September 30, 2021
2. From 1955 to 1998, home prices in America have increased just 0.1 percentage point per year over inflation. In fact, for the entire 20th century, the annual average increase in home prices was only a 0.2 percentage point per year over the inflation rate. Over the past year, nominal U.S. home prices are up nearly 20% or about 15% in real terms. — MarketWatch, September 30, 2021
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