This morning’s employment numbers showed a surprising increase in payrolls. As the New York Times reports:
The economy added 166,000 jobs in October, the fastest pace in five months, as payrolls grew in the service sector. The report could ease analysts’ fears of a slowdown and stocks markets appeared poised to rally on the news.
The estimate of job growth, which came in ahead of Wall Street’s expectations, follows a downwardly revised 96,000 gain in September and a 93,000 gain in August, the Labor Department said. Last month’s expansion suggests the labor market is recovering from a summer slowdown, though payrolls are increasing at the slowest annual rate since June 2004.
The numbers follows a trend we generally hear every month, (from the Wall Street Journal):
The Labor Department said hiring last month in goods producing industries fell by 24,000. Within this group, manufacturing firms cut 21,000 jobs. Construction employment was down by 5,000, the fourth-straight decline. Repeating a recent pattern, nonresidential construction fared much better than residential building.
Service-sector employment, in contrast, swelled 190,000, the biggest rise since May. Business and professional services companies’ payrolls spiked 65,000. Education and health services employment advanced by 43,000. Leisure and hospitality rose 56,000, while the government added 36,000 jobs.
This data is based on payroll employment by industry. Sometimes it is more interesting to look at occupations. As part of the employment data, BLS publishes non-seasonally adjusted year to year occupational data – in this case Oct 2006 to Oct 2007.
Management, business, and financial operations occupations, Professional and related occupations, Service occupations and Production occupations all showed an increase in employment. The surprise here is with the production occupations. Sales and related occupations, Office and administrative support occupations, Installation, maintenance, and repair occupations and Transportation and material moving occupations all lost jobs. Farming, fishing, and forestry occupations and construction and extraction occupations were essential unchanged.
That presents a different picture from the standard “services up – manufacturing and construction down” scenario.
The other interesting – and some what anomalous – bit of information comes from the unemployment data. One would expect that the number of unemployed would go up in those occupations where employment went down (and visa versa). But that is not how our labor market works. The “one-side up; the other side down” dynamics only occurred in Management, business, and financial operations occupations, Sales and related occupations and Transportation and material moving occupations. In Professional and related occupations, Service occupations and Production occupations unemployment went up even though employment increased. In Office and administrative support occupations and Installation, maintenance, and repair occupations both unemployment and employment declined. Unemployment in Farming, fishing, and forestry occupations went down while employment was unchanged. In Construction and extraction occupations unemployment jumped even though employment was essentially unchanged.
I’m not sure what to make of this. Nor would I want to make too much of two data points (Oct 2006 versus Oct 2007). But it does show the dynamics of the labor force is must more complicated — and much more interesting — then the services/manufacturing paradigm would indicate.
Time to change the paradigm?