Meet the Author

Murat Tasci |

Research Economist

Murat Tasci

Murat Tasci is a research economist in the Research Department of the Federal Reserve Bank of Cleveland. He is primarily interested in macroeconomics and labor economics. His current work focuses on business cycles and labor markets, labor market policies, and search frictions.

Read full bio

Meet the Author

Beth Mowry |

Research Assistant

Beth Mowry

Beth Mowry was formerly a research assistant in the Research Department of the Federal Reserve Bank of Cleveland. Her work focuses on labor markets and business cycles.

10.06.08

Economic Trends

The Employment Situation, September

Murat Tasci and Beth Mowry

Nonfarm payrolls declined by 159,000 between August and September, with losses spread across a wide range of industries. This marks the ninth consecutive month of employment decline and a continuation of the 6.1 percent unemployment rate, which remains the highest seen since September 2003. Revisions to July and August payrolls roughly cancelled each other out and amounted to modest additional gains of 4,000 for those two months combined. September’s decline in payrolls was larger than consensus expectations, which called for losses in the neighborhood of 105,000. Since the decline in payrolls started back in January, the United States has shed a total of 760,000 jobs.

The diffusion index of employment change sank further, moving from 44.7 in August to 38.1 in September. An index reading below 50 indicates that more employers are cutting jobs than adding them, and this past month’s movement indicates that an increasing number of employers began to do so in September. The index has not been this low since June 2003.

The goods-producing sector shed 77,000 jobs last month due to losses in both manufacturing (-51,000) and construction (-35,000). Manufacturing’s losses were felt predominantly in durable goods (-37,000), particularly in the area of motor vehicles and parts (-18,200). Residential and nonresidential construction both recorded job losses in this report, unlike in August when only residential construction lost jobs. Natural resources and mining continued to make a lone positive contribution of 9,000 jobs to goods-producing industries.

Service-providing industries took a greater turn for the worse in September, losing 82,000 jobs, compared to August’s smaller loss of 16,000. Losses were experienced broadly in service industries, with the exception of a 25,000 gain in education and health and a 9,000 gain in the government sector. However, the gain in government was less impressive than gains in the previous two months (39,000 and 31,000). Likewise, the gain in education and health was the smallest experienced during all of this year and the last. Within services, trade, transportation, and utilities lost 58,000 jobs, professional and business services lost 27,000, and financial activities and leisure and hospitality each lost 17,000. Retail trade fell further, dropping 40,100 jobs in September, compared to August’s drop of 25,400. Temporary help services, considered a leading indicator of overall employment conditions, continued to decline, recording its eleventh consecutive month of losses with a loss this month of 24,100 jobs.

Labor Market Conditions

  Average monthly change
(thousands of employees, NAICS)

2005

2006

2007

YTD
2008

Sept
2008
Payroll Employment 211 175 91 −84 −159
Goods-producing 32 3 −38 −75 −77
Construction 35 13 −19 −38 −35
Heavy and civil engineering 4 3 −1 −5 −5.5
Residentiala 23 −5 −20 −25 −12.9
Nonresidentialb 8 14 1 −7 −16.7
Manufacturing −7 −14 −22 −44 −51
Durable goods 2 −4 −16 −32 −37
Nondurable goods −8 −10 −6 −12 −14
Service-providing 179 172 130 −10 −82
Retail trade 19 5 6 −28 −40.1
Financial activitiesc 14 9 −9 −8 −17
PBSd 56 46 26 −33 −27
Temporary help services 17 1 −7 −27 −24.1
Education and health services 36 39 44 50 25
Leisure and hospitality 23 32 29 −1 −17
Government 14 16 21 23 9
Local educational services 6 6 5 9 16.3
           
Civilian unemployment rate 5.1 4.6 4.6 5.4 6.1

a. Includes construction of residential buildings and residential specialty trade contractors.
b. Includes construction of nonresidential buildings and nonresidential specialty trade contractors.
c. Includes the finance, insurance, and real estate sector and the rental and leasing sector.
d. Professional business services, which includes professional, scientific, and technical services, the management of companies and enterprises, administrative and support, and waste management and remediation services.
Source: Bureau of Labor Statistics.

The three-month moving average of private-sector-employment growth dug itself deeper into the negative territory first entered back in January and now sits at -126,000. Although headline payroll employment numbers for July and August were revised only modestly, private payrolls for these two months were revised downward by 40,000 and 43,000, respectively. Government payrolls were revised up 33,000 and 14,000. For the year, private payrolls are down 969,000, while government payrolls have risen by 209,000. These revisions show that overall payroll decline underestimates the loss in private payrolls due to significant gains in government payrolls.

Results from the government’s household survey indicates that the total unemployment rate stayed steady at 6.1 percent in September. Even though the number of those employed declined by 222,000, the labor force declined by 121,000, keeping the unemployment rate where it was in August. These monthly changes are common in the household survey and do not constitute a significant change.