Blowout jobs report gets a blowout

10 Charts on the mostly good news, but mind the noise in the signal

• More jobs than anyone expected!

• It’s a lot of healthcare, but not just healthcare—we get some surprising ups, and surprising downs, especially considering shopping season is upon us

• Is it signal or noise? Of (record) seasonal adjustments and non-responders

• The bond market did what, now?

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A blowout jobs report gets a blowout

Just a few quick points around last week’s “blowout” jobs report.

For new subscribers, the labor market is interesting for all kinds of reasons.

• the labor market has been “tight, but not strong” for the past few years. An aging population means that we were already secularly short workers, but a pandemic “pull forward” of retirement + very stimulated demand exacerbated that shortage. It led to massive gap between demand for workers and the supply of workers (especially at the lower-end of the skills/wage spectrum).¹

• that “worker shortage” gap caused wages to blow out wide (especially at the lower-end), inflation to run (especially in services). Likewise, closing that gap (substantially via the Open Border) gradually brought inflation mostly to heel.

• the open question though is whether demand for work would actually begin to increase once supply was all caught up, and where would that demand come from? Would it be just healthcare (i.e. the rotation to the National Nursing Home), or would be it be from actual economic dynamism?

• that question got ever more interesting as unemployment began to rise—not because people were getting fired, but because newer entrants and re-entrants (i.e. new supply) were the ones unemployed. If new worker-supply could not be absorbed, it suggests something of a “saturation point.”

• the added wrinkle (in addition to all sorts of data ambiguity) was some evidence of additional softening (not to mention Cautious Consumerism), particularly amongst “native born” workers, who are increasingly turning to part-time gig work, for lack of a better alternative.

• the added added wrinkle is rate cuts. If there’s real softening, then maybe the cuts are too small, too late. Of course, even if cuts are right on time (or too early), what does it even mean to “shore up” a secularly tight labor market. Where do the additional bodies come from and if demand “heats up” again, are we right back where we Labor Shortage started?

Now, with that throat clearing out of the way, on to the few quick points.

And the BLS reported, and it was good

First, it was a good report.

Jobs go up!

BLS

Survey says we added way more jobs than basically anyone expected.

We added 254,000 new jobs, to be precise, and unemployment stayed flat. Likewise, the “part-time-but-prefer-fulltime” stayed flat, and the job-finding rate, actually improved.

In other words, the worrying trends from the prior month did not get more worrisome, and some got less so.

Healthcare makes most of the jobs, plus some puzzles, good and bad

Second, while Healthcare didn’t make all the jobs, it did make a lot of the jobs.

Healthcare makes a lot of the jobs, but food services and construction too

Bancreek

Healthcare and government jobs drove most of the gains, but food services and contractors had some pretty healthy additions, as well.

Naturally, there is some seasonality at-work (more on that below) because it’s no surprise that September would see a bump in education hiring.

The Food Services etc. is definitely a very welcome sight, but the warehousing and storage is just weird. With record e-commerce sales on the way, why is there contraction in warehousing and storage?