The real unemployment rate – September 2019 – We're close to making history

The real unemployment rate – September 2019 – We're close to making history

Bottom Line: There’s a lot more to the employment report than just a couple of headline numbers. The last several months has proved the value of not overreacting to any one employment report. Especially when we’re already at the lowest unemployment rate in 50 years. Weaker reports might mean that hiring is really slacking off, or it might mean that the labor market is so tight it’s hard for employers to hire when they’re looking to do so. Throughout the first half of 2019, when we saw weakness in hiring it was generally the later. Friday’s employment report, the second for the second half of the year showed a continuation of the first half themes, with a huge bonus. We’re seeing the long-term unemployed, marginally attached and underemployed receive record opportunity as companies are providing better jobs and opportunities to people in those situations.

First, the headline stuff.

• Unemployment rate 3.7% - flat
• +130,000 jobs 
• Negative revisions from past months totaling -20,000 jobs

Top industries for hiring:              

• #1 Professional & Business services
• #2 Federal government    
• #3 Healthcare

Important takeaways:

• Healthcare has been consistently a leader in hiring. Federal government hiring was due to a ramp up in Census employees in advance of the 2020 Census
• Significant revisions continue with the government numbers and are likely to continue given the significant difference in private sector hiring (nearly 100k) between the ADP Report and the government report. Expect positive jobs revisions in future months

Now for the real unemployment rate once underemployed, long-term unemployed and marginally attached people are accounted for:              

• Actual: 7.2% down from 7.4% in 2018

Other takeaways:                

1. The real-unemployment rate continues to decline to near record low levels

2. Those unaccounted for in the base unemployment rate include 6.7 million Americans (1.2 million long-term unemployed, 4.4 million are underemployed & 1.1 million are marginally attached to the workforce). 

3. There are only four months in American history with a lower real unemployment rate