The Bureau of Labor Statistics (BLS) released its monthly Current Employment Statistics (CES) report and Current Population Survey (CPS) for October 2022 on Friday, November 4th. The monthly change in employment given by the CES and the unemployment rate from the CPS are seen as the standard gauges for assessing the health of the U.S. labor market.
Employment in the U.S. rose by 261,000 jobs. The jobs report exceeded the Geographic Solutions, Inc. forecast of 205,000. While the result is higher than expectations, it remains well within the prediction interval as new employment seems to have glided into a sub-320,000 pattern over the last three months. The forecast tied the WSJ Economist Survey which also predicted an increase of 205,000. This is the first time that GSI and WSJ predictions were exactly aligned since January 2021. Geographic Solutions, Inc. derives its employment forecast from internal data on the number of job openings, job searchers, job applications, job severances, and applications for unemployment benefits filed on Geographic Solutions state client sites. The forecast uses unemployment claims data from the U.S. Department of Labor (USDOL). Additionally, an indicator combining the interest rate on two-year treasury bills and the consumer price index were inserted to account for inflationary effects on the labor market.
The unemployment rate increased to 3.7%, above the Geographic Solutions and WSJ forecast of 3.5%. The unemployment rate forecast used internal data on the number of job openings, job searchers, unemployment applications, and job severances on Geographic Solutions state client sites. The forecast uses unemployment claims data from the USDOL.
Job creation was strongest in Education & Health Services (79,000), Professional & Business Services (39,000), and Leisure & Hospitality (35,000). Job growth was flat to positive in all industries.
While all sectors continue to grow, Leisure & Hospitality and Government are the only major sectors to remain below their pre-pandemic employment level.
The labor force participation rate fell to 62.2% from the previous month. The more expansive U-6 unemployment rate counts discouraged workers who are no longer actively seeking work (and therefore no longer in the labor force) and those that have settled for part-time employment but desire a full-time job. This measure of unemployment ticked up to 6.8%.
The two surveys are sending mixed messages about the labor market. The CES portrays a job market that has been steadily growing for months. However, the CPS is showing much more slack in the labor market as the number of unemployed increases, even as the labor force declines. Inflation, and the actions to contain it, are still major concerns for the labor market going forward. Private-sector wages have declined by 4.2% since February 2021, right before this accelerated inflationary period began. As the workforce demands higher wages to keep up with inflation, hiring is likely to slow and net job losses are possible.