the labor market situation - october 2013 jobs report recap
DESCRIPTION
TRANSCRIPT
DRAFT
0 0 Filename/RPS Number Office of the Chief Economist 0
The Labor Market Situation November 12th, 2013
Dr. Jennifer Hunt Chief Economist
US Department of Labor
Office of the Chief Economist
DRAFT
1 1 Filename/RPS Number Office of the Chief Economist 1
Very puzzling report
Expected bad report, due to shutdown/debt ceiling
– Especially household (CPS), expected spike in unemployment
– Because CPS captures furloughs as unemployment
– Payroll survey (CES) does not
Instead, saw
– Good CES job growth
– Almost flat unemployment rate in CPS
– Dive in employment and participation rates in CPS
DRAFT
2 2 Filename/RPS Number Office of the Chief Economist 2
Payroll survey: good October; upward revisions
1 month change, in thousands
• October 212
• September 150
• August 207
12-month change, in thousands
• October 2012 to 2013: 2,355
• Average: 196
DRAFT
3 3 Filename/RPS Number Office of the Chief Economist 3
Taking payroll survey at face value
The economy had more momentum than we thought in September
– Thursday’s GDP better than expected: 2.8% Q4
– August and September employment were better than we thought at time
So employment growth decent despite shutdown/debt ceiling
– Could have been really good employment growth without shutdown
DRAFT
4 4 Filename/RPS Number Office of the Chief Economist 4
Also, unemployment rate was flat
DRAFT
5 5 Filename/RPS Number Office of the Chief Economist 5
But employment fell sharply in CPS
DRAFT
6 6 Filename/RPS Number Office of the Chief Economist 6
As did labor force participation
DRAFT
7 7 Filename/RPS Number Office of the Chief Economist 7
Largest divergence in surveys since 1981
DRAFT
8 8 Filename/RPS Number Office of the Chief Economist 8
What explains the large increase in those not in the labor force?
Not in
Labor Force Employed Unemployed
3,698
4,306 2,497
2,652
Change = 155 + 608 = 763
+155 +608
DRAFT
9 9 Filename/RPS Number Office of the Chief Economist 9
What is going on? Data collection
How did shutdown affect data collection?
– Collection delayed
– Reference week stayed same
CPS
– Respondents remembering one week longer
– Response rate normal
How did shutdown affect CES collection?
– Data are already recorded by firms
– Response rate above average
DRAFT
10 10 Filename/RPS Number Office of the Chief Economist 10
What is going on? Recording of Federal furloughs
CES should not reflect
– Furloughed workers didn’t miss whole pay period
CPS
– Should appear as “unemployed, on temp layoff”
– 223,000 (not seasonally adjusted)
– But 217,000 recorded “employed but absent from work”
So stripping out furloughs:
- Unemployment rate would have been -0.2 pp (not +0.1pp)
- Helpful to reconciliation
- Employment-pop would have been -0.4 pp (not -0.3 pp)
- Unhelpful to reconciliation
DRAFT
11 11 Filename/RPS Number Office of the Chief Economist 11
Possible explanations
1. CES will be revised down next month - unlikely
– Generally revisions in upswing have been positive
– October particularly well-measured due to extra time for collection
2. CES overstates job growth – small
– Contractors who didn’t work during shutdown still counted as employed if paid bi-weekly or monthly
3. Contractors were kept on payroll by company even if not working – anecdotal
4. CPS is affected by recall bias – unknown size/sign
5. The employment decline in the CPS is an anomaly in a slightly volatile series
6. The CPS reference week was unusually early in month, and things improved later
DRAFT
12 12 Filename/RPS Number Office of the Chief Economist 12
So what was effect of shutdown?
Biggest jump in temporary layoffs since CPS began 1967
– +41%, or 448,000
– Of which about half were not federal employees
– Suggests effect of shutdown did ripple out
Shut-down may have nipped growth spurt in the bud
November report will tell more about shut-down’s aftermath
DRAFT
13 13 Filename/RPS Number Office of the Chief Economist 13
Thank you!
DRAFT
14 14 Filename/RPS Number Office of the Chief Economist 14
Employment growth by super-sector