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.

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Meet the Author

Michael Shenk |

Research Assistant

Michael Shenk

Michael Shenk was formerly a research assistant in the Research Department of the Federal Reserve Bank of Cleveland. His work focused on international topics and housing-market indicators.

10.05.07

Economic Trends

The Employment Situation, September

Murat Tasci and Michael Shenk

Nonfarm payrolls increased by 110,000 net jobs in September, the highest net increase since May 2007. This increase was within expectations. It is still below the average increase of 122,000 jobs per month in 2007. The Bureau of Labor Statistics (BLS) also revised its August payroll numbers significantly, reporting a job gain of 89,000 instead of a 4,000 job loss. The major reason for the difference that local figures for local education services were revised significantly; an increase of 39,000 was the final number, instead of a 31,000 decline as initially reported. We pointed out the erratic behavior of employment in local education services and suggested that it might be the reason behind the anomaly in the initial report last month. September’s job gains along with the revision for August imply an average monthly increase in payrolls of 97,300 in the third quarter of 2007—the lowest average monthly increase in a quarter since the third quarter of 2003.

The service-providing sector continued to grow in September, adding 143,000 jobs and offsetting the decline of 33,000 jobs in the goods-producing sector. The construction sector continued to suffer, losing 14,000 jobs. Most of the loss happened in the residential construction sector—about 20,000 jobs. However, nonresidential construction added an unusual 10,000 jobs to payrolls, suggesting a relocation of the construction workforce, from the residential to the nonresidential sector. Education and health services and leisure and hospitality services continued to be a major source of job growth within the service-providing sector; together they added 80,000 jobs. Professional and business services and the government sector contributed another 58,000. Finally, the unemployment rate is virtually unchanged at 4.7 percent, slightly higher than the average in 2006 and in 2007 so far.

Labor Market Conditions

  Average monthly change
(thousands of employees, NAICS)
2004 2005 2006 Jan-Sept. 2007 September 2007
Payroll employment
172
212
189
122
110
  Goods-producing
28
32
9
−22
−33
    Construction
26
35
11
−8
−14
      Heavy and civil engineering
2
4
2
−1
−4
      Residential a
9
11
−2
−5
−20
      Nonresidentialb
3
4
6
1
10
    Manufacturing 0 −7 −7 −16 −18
      Durable goods 8 2 0 −12 −10
      Nondurable goods −9 −9 −6 −4 −8
  Service-providing
144
180
179
144
143
    Retail trade
16
19
−3
8
−5
    Financial activitiesc
8
14
16
1
−14
    PBSd
38
57
42
18
21
      Temporary help services
11
18
−1
−10
−20
    Education and health services
33
36
41
52
44
  Leisure and hospitality
25
23
38
27
35
    Government
14
14
20
21
37
      Local educational services
8
6
11
6
19
        Average for period (percent)
Civilian unemployment rate
5.5
5.1
4.6
4.5
4.7

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

Overall, the payroll employment pictures seems to indicate moderate employment growth, improving since the summer months but still below the levels we have experienced in the past 15 quarters.