November 4, 2005 (Jobs Byte)
Job Growth Slows in October
November 4, 2005
By Heather Boushey
Involuntary part-time employment has dropped by 10.2 percent over the last year.
Employers added only 56,000 new jobs in October and the employment levels for August and September were revised downwards by a total of 36,000 jobs. The average employment gain over the past three months was 65,000 new jobs, lower than the average over the previous year. This is most likely due to the effects of hurricane Katrina and ensuing higher energy prices. The BLS reported that in October, there was a discernable difference in labor market trends for Katrina-affected areas and the nation as a whole, indicating that, unlike in September, slow employment growth is not limited to Katrina-affected areas.
Employment growth declined across many sectors of the economy. Retail trade has shed jobs for months, falling by 5,000 in October and 82,000 since July. Losses were concentrated in department stores, general merchandise stores, and auto dealers, which lost 18,000, 14,000 and 8,000 employees, respectively, in October. Transportation lost 800 jobs in October, down by 10,000 since June and leisure and hospitality lost 8,000 jobs, down by 81,000 jobs since July.
Employment gains were concentrated in goods production, which added 49,000 new jobs. Manufacturing had its second month of job gains, adding 12,000 employees in October. Only durable goods production added employment; non-durable goods jobs fell by 6,000 jobs. Construction continued to add jobs, as did finance, and education and health care.
The temporary help sector added 11,000 new jobs in October, for a three-month gain of 64,700, indicating that employers are feeling some pressure to take on new staff.
Nominal wages grew by $0.08 in October, with an annualized rate of growth over the past three months of 3.3 percent. However, wages are growing about a third as fast as inflation, due to the rapidly rising energy prices in September, which led to an annualized rate of inflation over the past three months of 9.4 percent. Wages grew in October across all industries. However, the three-month annualized rate of wage growth in retail is still lower than other industries, at -2.5 percent.
Hours in goods production shot up 0.4 to 40.3 hours per week, after hovering at 39.9 hours for the past year. However, overall hours were unchanged in October, at 33.8 hours per week and the index of aggregate hours was also unchanged.
The household survey shows signs of improvement. The share of the unemployed who are "job leavers," that is, they report leaving their job voluntarily, hit a high of 12.0 percent in October, the highest since 2001. There are fewer discouraged workers, compared to a year ago; however, the drop has been concentrated among men. There are 33,000 fewer discouraged male workers in October compared to a year ago, a decline of 12.8 percent, while there are 5,000 fewer discouraged female workers, a decline of only 2.9 percent. It is not all good news, however, as the share of workers who are long-term unemployed inched back up to 19.5 percent, up from 17.8 percent back in June.
The unemployment rate fell from 5.1 to 5.0 percent in October. The unemployment rate for black teens increased from 32.6 to 32.9, indicating that the high of 35.8 percent in August was more of an outlier than the start of a higher trend. Similarly, the unemployment rate for Latinos fell back to 5.8 percent in October, where it had been over the summer, from the one-month high of 6.5 percent in September.
The employment rate continues to increase, even though the labor force participation rate fell in October. The employment rate for men aged 20 and over increased from 72.5 to 72.6 percent, up from 72.0 percent a year ago, while over the past year, the women's employment rate increased from 57.4 up to 57.8 percent.
Note: October's employment report includes the effects of hurricane Katrina, but not hurricanes Rita and Wilma because they struck after the survey reference period.
Heather Boushey is an economist at the Center for Economic and Policy Research in Washington, D.C.
CEPR’s Jobs Byte is published each month upon release of the Bureau of Labor Statistics’ employment report.