The September Non-Farm Payrolls came in at + 114,000 with a lower unemployment rate 7.8%, slightly higher labor force participation and upward revisions of 40,000 to July (+181,000) and 46,000 in August (+142,000). The 2012 average monthly employment gain is +146,000 down from the 2011 average of 153,000. The labor force participation rate edged up to 63.9% from the August lows of 63.7%.
This number will receive massive attention, and significant skepticism from some quarters, given the presidential contest and the focus on jobs by the candidates. We need about 110,000 net new jobs each moth to keep up with population growth. Thus, we are doing a touch better than treading water of late. We continue on a seasonal pattern of disappointing numbers in the spring, middling numbers in the fall and relatively robust numbers in the winter months.
We continue to see very tepid GDP growth and underwhelming employment performance. All these numbers must be seen in the context of recovery from the second worse macro economic performance period in the last 80 years. Thus, we would like to see stronger job, wage and GDP growth than we have seen. We value the employment report for what it tells us about economic health. Labor force participation, graphed above, is important as well. This tells us how many are employed -- full and part time -- and looking. This number edged up in September but has been falling for the last decade. The downtrend is troubling. The employment population ratio is another vital measure. This allows a gage of the inclusive opportunity set. Employment population ratios have also been trending down, although were up in September.
There was significant volatility by sector in the September jobs report. Manufacturing was weak with -16,000. Education and health services were very strong, +49,000; this was led by health care services, +44,500. The public sector added jobs in September +10,000 with state and federal hiring rising and local employment declining by 7,000. Temporary services, sometimes seen as a leading indicator, saw declining employment in September.
Wages are barely keeping up with headline inflation, in the best of months. The Bureau of Labor Statistics tells us that average hourly earnings have increased 1.8% over the last 12 months. The BLS also tells us that the average increase in consumer prices, increased by 1.7%. The CPI less food and energy was up 1.9%, food increased by 2.0%. Thus, the average wage has not increased over the last year or the last 5 years. The 92% of the labor force that is working has not seen a wage increase in a very long time. Thusly, the economy is not improving for the majority of the labor force.
Next month's October Non-Farm Payrolls will be profoundly political as it comes just 4 days before the elections. Thus, today's numbers will fade as attention re-centers on the October numbers and revisions. We would be well served to remember that these are volatile series and single month reports are subject to major revision and distortion. Lately, there is profound political spin and attention to the numbers as well.
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