Chart of the Day: Net New Jobs in September

The American economy lost 33,000 jobs last month. We need 90,000 new jobs just to keep up with population growth, which means that net job growth clocked in at -123,000 jobs. And yet, the unemployment rate ticked down to 4.2 percent and the labor participation rate increased to 63.1 percent. What’s going on?

There are two plausible explanations. First, the jobs survey was scheduled just after Hurricane Harvey. Since much of Houston was underwater, businesses reported that no one was working, and that skewed the numbers.

The second alternative is that it’s just one of those things. There are two surveys: the payroll survey of businesses, which produces the jobs report, and the household survey, which produces the unemployment report. As the chart below shows, they frequently diverge significantly:

Over time, these two surveys generally even out, but September might have been one of those months where they happened to diverge a lot. Combine that with Hurricane Harvey and you get a very strange jobs report. It’s probably best not to pay much attention to it.

On the earnings front, there was surprisingly good news: hourly earnings of production and nonsupervisory employees went up at an annual rate of 5.1 percent. Inflation is currently running around 2 percent, so that’s excellent wage growth. We’ll see if the Fed allows it to continue.


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