September jobs report: What you might have missed

October 5, 2012

Earlier today, I wrote up the September jobs report, Dylan Matthews provided the charts, and Ezra Klein explained why the drop in the unemployment rate down to 7.8 percent certainly wasn't the work of a government conspiracy. Now here are a few other tidbits in the report that you might have missed:

1) Obama's track record on jobs. Over at the Wall Street Journal, Sudeep Reddy explains that since President Obama took office in January 2009, private non-farm payrolls have risen by 514,000 and government payrolls have dropped by 575,000.

Now, if you add in the Bureau of Labor Statistics' preliminary benchmark revisions (which offer an even more accurate look at jobs figures), then the private sector has created 967,000 jobs since Obama took office, while governments at all levels have shed 642,000 jobs.

2) Why last month's drop in unemployment is unlikely to be a total fluke. The unemployment rate is calculated from a monthly survey of 60,000 households. As such, it's likely to be a bit volatile. This month, the household survey showed that 873,000 more Americans were employed in September than in July, with unemployment dropping 0.3 points to 7.8 percent. That could be wrong. But labor economist Betsey Stevenson argues on Twitter that the drop in unemployment is statistically significant. "A fall of 0.3 may be bigger or smaller than 0.3," she notes, "but it is a clear fall." 

So, although the unemployment rate could tick back up a bit next month, as the household survey data bounces around, the improvement in the labor market in September is very likely to be real. 

3) There's some evidence that business creation is picking up in the United States. Here's one theory for why the Bureau of Labor Statistics's household survey (which showed a big drop in the unemployment rate) looks stronger than the agency's payroll survey (which showed that the economy only added 114,000 jobs in September). It could be that the payroll survey, which tends to survey established companies and government, is missing an uptick in new business creation.

As Justin Lahart and economist Justin Wolfers point out, if business creation were picking up, then you'd expect to see a stronger household survey and a big upward revision when the BLS goes through its payroll data more carefully each year. And that's exactly what happened—by poring through state-level tax data, BLS found an extra 386,000 jobs in March of 2012 than it had originally estimated. And the household data is way up. Still, this is just a theory.

4) Manufacturing is weakening, while other sectors are up. Here's Greg Ip: "[T]he gains were concentrated in health care, transportation and warehousing, and finance. Manufacturing employment dropped, which corroborates weakness in factory activity that may reflect the slowing global economy and worries about a recession if politicians don't move the year-end 'fiscal cliff.'"

5) Political scientists say this unemployment report probably won't influence the presidential election. Here's a line from Robert Erikson and Christopher Wlezien, who reviewed 60 years of economic and elections data: "[O]ne can predict the actual vote from the current income growth about as well in April as in November. By April, the economic cake is largely baked." John Sides concurs that "late changes in the economy aren’t that consequential," although he adds that a strong jobs report might blunt some of Mitt Romney's recent momentum in the polls.

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