Industry News

Market Reporting that Matters

October 2017 Jobs Report

Hiring Rebounds as Predicted

Wednesday, November 8, 2017

 

The U.S. economy rebounded strongly from September’s hurricane slump to add 261,000 jobs in October, the largest monthly gain since July 2016, according to the U.S. Bureau of Labor Statistics (BLS).

The unemployment rate declined to 4.1%, but that was because of a decrease in the civilian labor force of more than 760,000. The household survey also showed a decline in employed persons of 484,000, possibly due to the timing of the survey in relation to the effects of the hurricanes.

 

IN THIS ISSUE

Hurricanes Hit Top Jobs List

Has the Job Opening and Hiring Relationship by Industry Changed?

By the Numbers

Revisions to the previous two months’ numbers resulted in a net increase of 90,000 jobs to the estimates. August’s job-gain figure of 169,000 was revised upward to 208,000, while September’s was revised up from -33,000 to 18,000, erasing the first negative monthly change since 2010.

Annual job growth increased to 1.4% in October, 10 basis points (bps) higher than September 2017 but 30 bps less than October 2016. Annual job gains were 2.004 million, 431,000 less than October 2016’s total.

Average hourly earnings (wages) for privately employed workers were almost unchanged from September (up 1¢), but October’s average of $26.53 represented a 2.4% increase from one year ago. Annual wage growth has averaged almost 2.6% since late 2016.


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October's U3, or “headline,” unemployment rate of 4.1% was down from 4.2% in September. The civilian labor force participation rate was down 40 bps from last month, but only 10 bps lower than last year. The employment-population ratio of 60.2% was 20 bps lower than the previous month, but 50 bps higher than October 2016.

The number of part-time workers for economic reasons (4.75 million in October) decreased by 369,000 from September, and was down by 1.1 million from October 2016. The U6 unemployment rate, which includes these part-timers and marginally attached workers, decreased to 7.9% in October, a 160-bps drop from October 2016.

The number of long-term unemployed (27 weeks or more) fell by 112,000 from September to 1.62 million on a seasonally adjusted basis. The number of multiple jobholders decreased by 641,000 from October 2016 to 7.4 million, and the number of discouraged workers not in the workforce (524,000) increased by 37,000 from one year ago.

Industry Focus

The not seasonally adjusted unemployment rate for the Education & Health Services industry dropped 140 bpsin October from last year, the largest drop among supersectors. Manufacturing fell 120 bps to 4.5%. Wholesale and Retail Trade dropped 110 bps, and Construction dropped 100 bps. The remaining industry sectors dropped 20-90 bps, except for Information, which increased up 40 bps.


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The post-hurricane job-gain rebound was most evident in the Leisure & Hospitality industry (+106,000). Other industries with solid positive growth included Professional and Business Services (+50,000), Education & Health Services (+41,000), Manufacturing (+24,000), Other Services (+12,000), and Construction (+11,000). Mining & Logging and Information were the only industries shedding jobs last month.


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  • Restaurants and bars reopened in September after the hurricanes, pushing the food services and drinking places (+88,500) subsector to account for most of the gains in Leisure and Hospitality in October. Modest increases occurred in the arts, entertainment and recreation sector (+15,600), as coastal casinos regained footing.
  • The Professional and Business Services supersector’s job gains were split between the high-paying professional and technical services (+14,200) subsector and the administrative and waste services (+32,100) subsector, with the majority of that subsector’s gains in temporary help services (+18,300).
  • Education & Health Services added just 7,600 education jobs, but 21,500 health care jobs. The social assistance subsector added another 12,000, even though child daycare services lost 3,200 jobs in October.
  • Manufacturing hiring was strongest in durable goods manufacturing (+19,000), particularly in computer and electronic products (+4,700) and fabricated metal products (+4,000). Nondurable goods manufacturing added just 5,000 jobs last month.
  • The Other Services industry added 8,600 jobs in personal and laundry services. The 2,800 jobs lost in repair and maintenance in September returned with an equal gain in October.
  • Rebuilding efforts boosted both residential and nonresidential specialty trade contractors (+6.100 and +4,300, respectively), while residential building construction added 7,200 jobs in October.
  • Government industry employment added 9,000 jobs, with 5,000 of them at the federal level. Another 2,000 jobs each were added at the state and local levels.
  • Trade, Transportation and Utilities added 6,000 jobs, with wholesale trade contributing 5,700 jobs, and retail trade losses of 8,300 jobs offset by transportation and warehousing gains of 8,400. In the retail sector, strong gains in the motor vehicles (+8,200), and building materials stores (+5,500) were negated by losses in general merchandise stores (-8,100), clothing and accessories stores (-5,800) and miscellaneous stores (-4,800).
  • The Financial Activities industry (+5,000) saw last month’s surge in insurance carriers’ jobs bounce back in the opposite direction with a -6,800 job loss. Real-estate and leasing agents returned to work with a gain of 10,900 in that subsector.
  • The telecommunications (-5,000) subsector brought the Information industry (-1,000) down for the month, despite gains of 3,100 in motion picture and sound recording.
  • The Mining & Logging industry (-2,000) experienced a delayed hurricane effect in the support activities for mining subsector (-1,600) in October.

 

Hurricanes Hit Top Jobs List

Houston and several Florida metros tumbled down the list of top job gainers in September (the latest metropolitan-level data available) among the 120 metros ranked by Axiometrics, a RealPage company, as their local economies were disrupted by Hurricanes Harvey and Irma. Houston, Tampa and Orlando dropped off of September’s top 10 list from Nos. 6, 9, and 10 to Nos. 24, 28, and 16, respectively. Miami plunged from No. 29 to tie for No. 92 with Gainesville, FL. Fort Lauderdale fell from No. 21 to No. 36. Every Florida metro moved down the Axiometrics top 120 list this month, indicating the statewide disturbance from Irma.

New York, Atlanta, Dallas and Boston remained the top four job-gainers, in order. Los Angeles replaced Washington, DC at No. 5, as the nation’s capital fell to No. 10 in September. Minneapolis-St. Paul and Seattle each moved up one spot to Nos. 6-7, while Riverside and Phoenix rejoined the top 10 list at Nos. 8-9.

Together, the total jobs created in the top 10 metros for the 12 months ending in September were down -19.4% from August’s annual total (507,200 vs. 629,100) and were -32.1% lower than the 12-month total for September 2016 (507,200 vs. 747,000). A comparison of the same top 10 metro job-gainers from August to September revealed a -15.8% decline in annual job gains.

Other major metro movers included:

  • Anaheim improved from No. 111 to No. 64.
  • Pittsburgh moved up from No. 52 to No. 29.
  • San Jose went from No. 49 to No. 33.

In addition to Houston and the Florida metros, several other metros moved down the list:

  • Oakland fell from No. 28 to No. 40.
  • Philadelphia dropped from No, 36 to No. 46.
  • Chicago dipped from No. 34 to No. 44.

In addition, the Midwest metros of Milwaukee, Cleveland, Indianapolis and Columbus each climbed at least 10 spots on the top 120 list.

Annual job growth slowed in all but two of the top 10 markets in September:

  • Phoenix (-184 bps)
  • Los Angeles (-126 bps)
  • Dallas (-121 bps)
  • Riverside (-111 bps)
  • Atlanta (-108 bps)
  • New York (-100 bps)
  • Seattle (-93 bps)
  • Washington, DC (-63 bps)

Job growth was up in:

  • Minneapolis (+5 bps)
  • Boston (+20 bps)

Two of the bottom five returned from last month with even stronger net job losses. Akron and Virginia Beach lost an additional 6,600 jobs combined from last month’s annual pace. Newark, Tucson and Cape Coral, FL joined the bottom five list in September. Tucson’s losses occurred in administrative and support, and waste management and remediation services (-2,200). Newark’s losses were also in administrative and support services (-6,500), as well as retail trade (-1,500) and finance and insurance (-1,200). Cape Coral fell victim to Hurricane Irma, as losses occurred in the Leisure & Hospitality (-2,700), Construction (-2,800) and Professional & Business Services (-1,200) industries.

 
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Access the current job-growth spreadsheet here.

Please contact us if you have any questions. Info@axiometrics.com

 

Has the Job Opening and Hiring Relationship by Industry Changed

One of the U.S. Bureau of Labor Statistics’ Monthly Labor Review articles in January 2016 titled “Which industries need workers? Exploring differences in labor market activity” discussed in-depth the relationship between certain data elements from the BLS’s Job Openings and Labor Turnover Survey (JOLTS). Specifically, it graphed and examined the simultaneous connections as they existed in 2014 between the job opening rate and hiring rate for the standard industry classifications.

Has that relationship between job openings and hiring rates changed during and after the recovery? Let’s look at data from 2012 and 2017 to see.

The job opening rate is the number of advertised and open positions an employer has at the end of the month, divided by the number of employees in the industry. It is a good measure of the unmet demand for workers. The hiring rate, as it implies, is the number of newly employed workers likewise divided by the employees in that industry. Together, they can give you an idea of which industries might attract young people entering the workforce and which are harder to get into.

 


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The select group of industries charted above are divided into four quadrants based on their positioning in relation to the U.S. average for both openings and hiring. In August 2012, the average job openings rate was 2.7 and the average hiring rate was 3.3. Each of the quadrants represent either high job openings and low hires (upper left); high job openings and high hires (upper right); low job openings and high hires (lower right); and low job openings and low hires (lower left).

As you can see in the chart, several industries fall into each quadrant. Industries with low job openings and low hires, such as Government, Manufacturing and Wholesale Trade, are not typically good candidates for job seekers since they are not traditionally high-growth. Private school teachers who make up the bulk of Educational Services (as well as the public school teachers in the Government industry) also are considered low growth.

Industries with high job openings and low hiring rates, such as Health Care, Information (tech) and Financial Activities, have many jobs unfilled, because they often require special training or education. High job openings and high hiring rates are typical of the Accommodation & Food Services and Professional & Business Services industries. The high turnover in subsectors such as temporary help and food services keep the hiring rate high while employers also seek to fill these positions.

Lastly, the low job openings and high hiring rate industries such as Retail Trade, Construction, Mining & Logging and Arts, Entertainment, and Recreation can be either high- or low-turnover industries. Little need is felt by employers to advertise positions in some of these industries, since they tend to fill quickly.

The highest hiring rate was in the Arts, Entertainment, and Recreation industry at 7.1, while the highest job openings rate was in the Professional & Business Services industry at 4.0.

August 2017 JOLTS data (the latest available) found that the average U.S. job openings rate increased sharply to 4.0, while the hires rate has shifted up slightly to 3.7 as national unemployment has fallen to 4.1%. This caused only small changes to the positioning of each industry relative to the quadrants they occupied in 2012.

 


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The Information industry slipped into the lower left quadrant primarily because of the jump in the overall openings rate. Job openings have increased dramatically in the Health Care and Accommodation, and Food Services industries (more than two full percentage points each), bringing the national average up overall.

Essentially, each industry remained in or close to their relationship quadrant from 2012-2017, but improvement in the health of the economy has benefited some industries more than others. The Construction industry in particular has seen an increase in job openings rate from 2.0-3.5, while at the same time the hiring rate slipped from 6.0-5.6, indicating a tight labor market in that industry. Two other industries with solid improvement over the past five years are Mining & Logging and Manufacturing.

 

By the Numbers

The following table shows September 2017 (the latest data available) metropolitan-area job gain and job growth, some grouped by state or region.


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