The September payrolls report disappointed, as it fell short of the expectations and didn’t show an improvement from August either. Indeed, September payrolls fell 263 000 following an upwardly revised decline by 201 000 in the previous month and a decline by 304 000 in July (earlier reported at -276 000). The unemployment rate rose to an expected 9.8%, the highest since the 1982 recession, from 9.7% previously. On top of these, the average weekly hours dropped 0.1 h to 30h, matching the cycle low and the aggregate weekly hours worked, which combine the average workweek and the payrolls numbers, declined 0.5% M/M. There was no relief from the Average Hours Earnings that rose by a meagre 0.1% M/M in September, albeit it following an upwardly revised 0.4% M/M in August. The BLS announced on top of these figures a preliminary March 2009 payroll revision of -824 000, which would bring the job losses since the start of the recession to about 8 million. Overall, these headline figures all came out disappointing.
Nevertheless, we don’t think that the weakness in September puts into doubt the improving trend in payrolls, even if the September results shouldn’t by replicated in October and November. Why not? Firstly, the combination of the earliest possible timing of the survey week and the latest possible timing of the Labour Holiday Day, the official end of the Summer holiday season, negatively affected the report, especially in the headline payrolls figure, but probably too in the hours statistics. This was most visible in the educational related payrolls that caused the government sector to report a loss of 53 000 jobs in September. Secondly, the leading indicators of payrolls improved further. Indeed, the business services payrolls, including the Help Wanted Agency payrolls improved further, shedding only 8 000 and 2 000 payrolls, the best results since the turn for the better in the payrolls. Thirdly, the cyclical sectors shed jobs at a slower pace. This applies to business services, financial sector and manufacturing. Fourth, the September results (- 263 000) are still substantially better than the trend (3-month average of 323 000 in August).
