Expect More 'Great' Jobs Reports Soon
Bet on more impressive-looking monthly jobs reports from the US Labor Department in coming months. Hiring is playing catch-up after August and September were unusually slow. This kind of shift in the timing of seasonal hiring ramp plays havoc with the efforts of the Bureau of Labor Statistics to adjust monthly job stats for seasonality.
Note in our table: The one-month change in US private-sector jobs was +655,000, much higher than the past two Octobers. The three-month change remains hundreds of thousands behind those same precedents.
In our view, signs of catch-up hiring comprise a positive read on the US economy. Dissecting the report by industry, we get clues about what drove the snapback.
Construction: Catch-up hiring. From June through September, construction job growth was 63,000 lower than the same period of 2014. The October 2015 increase topped Oct. 2014's one-month change by a whopping 28,000. Recent ISM and Beige Book reports have cited construction labor as being in shortage.
Healthcare: Legitimate strength. The one-month increase for Oct. 2015 was 16,000 greater than the same month a year ago, accelerating from the third quarter trend.
Retail trade: Catch-up hiring. October one-month job growth was 29,000 better than in Oct. 2014. Prior to that, 3Q15 job growth had been 34,000 less than 3Q14. We suggest that employers deferred seasonal hiring in an uncertain economic environment.
Administrative and support services: This category includes temporary staffing services. The sector had been slow in the third quarter, with job growth 74,000 less than 3Q14. October's one-month surge was 37,000 better than Oct. 2014. Looks like more signs of catch-up hiring after a cautious end to summer.
Even after the October burst, many economic sectors remain well below last year's job-growth trend. Some have downshifted into slower-growth mode, but we also see pervasive issues with labor supply. Hiring processes have elongated because of increased difficulty finding candidates. Rising employee attrition and upward movement in wage expectations also are complicating time-to-hire.
In summary, we expect monthly US jobs reports to look better than they really are for several more months, because the timing of hires has been pushed later into the year (which the governnment's seasonality adjustment model will turn into possibly explosive-looking numbers).