Editorial Update: This story includes additional analysis subsequent to the U.S. Bureau of Labor Statistics' release of the U.S. unemployment rate on Friday, Nov. 5. The original story, which was released on Thursday, Nov. 4, remains unaltered below.
Author's Note: Gallup's end-of-October data showed that the unemployment rate plunged during the last half of the month. While some of this improvement took place after the measurement period for the government's jobs report, the report evidently picked up enough of the improvement to keep Friday's unemployment rate as announced by the government unchanged at 9.6% -- slightly better than the 9.7% bottom of Gallup's projected range.
In essence, Gallup's daily monitoring of jobs in America picked up a late September and early October surge in unemployment and a late October plunge that likely balanced themselves out in the government's monthly measurements to produce no change in October's U.S. unemployment rate. Some potential reasons for this last-minute surge in hiring are outlined at the end of the original story below.
Regardless of the reasons, however, the jobs situation appears to have shown substantial improvement in late October -- not only as reflected in Gallup's unemployment data but also in Gallup's Job Creation Index. If this improvement continues, the U.S. unemployment rate for November could show a decrease when reported in early December. The question remains as to whether this late October jobs momentum can be maintained during the month ahead or whether it will disappear as quickly as did the sharp increase in unemployment that, according to Gallup data, preceded it.
PRINCETON, NJ -- Gallup analysis suggests the October unemployment rate that the government reports on Friday will be in the 9.7% to 9.9% range. This is despite the fact that unemployment, as measured by Gallup without seasonal adjustment, fell sharply to 9.4% at the end of October -- down from 10.0% in mid-October and 10.1% at the end of September. Most of this drop took place after the official Labor Department measurement period, suggesting the government's October report may not pick up this late-month decline.
Fewer Men, Younger Workers, and Less Educated Are Unemployed
The sharp drop in Gallup's unemployment rate in late October was driven in part by an improvement in the employment situation among men, as their unemployment rate fell by more than one percentage point. The unemployment rate among women was essentially unchanged. Unemployment among those aged 18 to 29 in October was 13.8%, an improvement of two points.
Among those with no college education, the unemployment rate improved by more than one point to 12.8% in October.
Percentage of Part-Time Workers Looking for Full-Time Work Holds Steady
The percentage of part-time workers who want full-time work remains at 8.6% of the workforce, matching the mid-October low for the year. This represents a slight decline from 8.7% at the end of September and is well below the 9.3% reading at the end of August.
Underemployment Also Takes a Plunge
The sharp decline in unemployment and the lack of change in the percentage of part-time workers wanting full-time work has led to a plunge to 18.0% in the underemployment rate -- the lowest level of the year. This is down from mid-October's 18.6% and 18.8% at the end of September.
Relationship to the Official U.S. Unemployment Rate
Gallup's end-of-October data suggest that the unemployment rate plunged during the last half of the month. However, most of the improvement took place after the measurement period for the government's jobs report, due out Friday. Over that period, Gallup's unemployment measure, which is not seasonally adjusted, increased from 9.4% in mid-September to 10.1% at the end of September and 10.0% in mid-October. As a result, Gallup analysis suggests the government's seasonally adjusted October unemployment rate is likely to increase into the 9.7% to 9.9% range when it is reported on Nov. 5.
This estimate seems consistent with the increase of 43,000 private-sector jobs ADP reported and the slight increase in layoffs Challenger reported for October. Neither of these reports suggests sufficient job growth to maintain the current unemployment rate, given the normal growth of the U.S. workforce. However, Gallup's late October unemployment trends suggest this situation could be changing. If these new trends continue, the government's unemployment rate for November is likely to show a decline when reported in early December.
Why the Decline in Unemployment?
In part, the sharp improvement in the unemployment rate and in underemployment during late October may be explained by the approaching holiday sales season. Halloween is becoming a bigger holiday and could be responsible for some added hiring. Further, some retailers are starting their Christmas sales early, anticipating a flat sales period, and could be adding jobs. Both of these possibilities are consistent with the ADP report that private-sector service jobs grew by 77,000 in October.
Another more speculative possibility involves Federal Reserve policy and the midterm elections. Many companies seem to have simply put a hold on new activities, including hiring, during late September and early October, as the economy seemed to be weakening more than expected and the business operating environment seemed more uncertain than normal. However, as late October arrived, business leaders could have become less uncertain about prospects for the economy going forward as it became clear that the Fed was going to inject more money into the economy. Some company executives could also have found some comfort in the expectation that the Republicans would take over the House, thus slowing the potential for challenging new legislation and new regulations, and perhaps increasing the chances of tax cuts or other incentives to spur the economy.
Regardless of the reason -- and although it was too late to help political incumbents on Tuesday -- it appears that the jobs situation showed substantial improvement in late October. Now, it is up to the Fed and the new Congress to build on what appears to be some late October jobs momentum.
Gallup.com reports results from these indexes in daily, weekly, and monthly averages and in Gallup.com stories. Complete trend data are always available to view and export in the following charts:
Read more about Gallup's economic measures.
Gallup classifies American workers as underemployed if they are either unemployed or working part time but wanting full-time work. The findings reflect more than 18,000 phone interviews with U.S. adults aged 18 and older in the workforce, collected over a 30-day period. Gallup's results are not seasonally adjusted and tend to be a precursor of government reports by approximately two weeks.
Results are based on telephone interviews conducted as part of Gallup Daily tracking from Oct. 2-31, 2010, with a random sample of 18,424 adults, aged 18 and older, living in all 50 U.S. states and the District of Columbia, selected using random-digit-dial sampling.
For results based on the total sample of national adults, one can say with 95% confidence that the maximum margin of sampling error is ±1 percentage point.
Interviews are conducted with respondents on landline telephones and cellular phones, with interviews conducted in Spanish for respondents who are primarily Spanish-speaking. Each daily sample includes a minimum quota of 150 cell phone respondents and 850 landline respondents, with additional minimum quotas among landline respondents for gender within region. Landline respondents are chosen at random within each household on the basis of which member had the most recent birthday.
Samples are weighted by gender, age, race, Hispanic ethnicity, education, region, adults in the household, cell phone-only status, cell phone-mostly status, and phone lines. Demographic weighting targets are based on the March 2009 Current Population Survey figures for the aged 18 and older non-institutionalized population living in U.S. telephone households. All reported margins of sampling error include the computed design effects for weighting and sample design.
In addition to sampling error, question wording and practical difficulties in conducting surveys can introduce error or bias into the findings of public opinion polls.
For more details on Gallup's polling methodology, visit www.gallup.com.