A bit of a respite in unemployment terms. The official unemployment rate for Fayette County dropped .5% to 7.7%. This is along seasonal change lines (there is often a drop between Aug and Sept) but it was also a bit more than expected. This means two things to me: one, employment following seasonal trends is a good thing. When employment is following seasonal trends, it often means that it there are no other major forces acting on it. Two, if I expected unemployment to drop around .2% and it dropped by .5%, that gives me hope that we may have eliminated some of that excess unemployment that we have racked up during the recession. Here is a visual view of what I am talking about:
From February when we were about 3% above normal, to June/July/August when we were about 4% above normal, Lexington still managed to follow it’s normal seasonal trends. From the averages of the rest of the years in this decade, one would expect September unemployment to drop around .2%. So it is definitely good news that it dropped farther than that.
So you may be asking yourself, “Self, what about the labor force? Is this drop in unemployment due to a large number of people dropping out of the labor force (i.e., no longer looking for work)?”
Well I’m glad you asked, because I did the same thing with the labor force that I did with the unemployment rate – with one caveat. Because Lexington is a population growth city, the labor force naturally grows as well. So I had to normalize it by using the average percent change instead of the raw number. Here is what I found:
It does look like that a contraction in the labor force may have played a role in the greater than anticipated drop in the unemployment rate. The average percent change from August to September is a positive .08%, whereas this year, it was a negative .26%. I still stand by my statement that a drop in the unemployment rate is a good thing. However, like most things, it has to be taken with the grain of salt that the labor force contracted. I’ll continue to keep an eye on the trends and keep my fingers crossed that our nagging unemployment problem will eventually subside.