U.S. Employment Numbers Weakens Again
After a relatively strong November U.S. employment report, the December report came in much weaker.
While the unemployment rate was unchanged, that was only because the participation rate again dropped. The employment rate fell from 58.5% to 58.2%-the lowest since July 1983, and down from the peak level of 64.7% in April 2000. The household survey in fact said that employment fell by as much as 589,000.
The more reliable (at least when it comes to monthly fluctuations) payroll survey indicated that "merely" 85,000 jobs were lost. But that's bad enough, especially considering that the population is growing, and the fact that the household survey has tended to be a lot weaker during the latest year (Aggregate household survey job loss was 5.4 million, while the aggregate payroll survey job loss was 4.2 million) indicates that the payroll survey likely underestimates job losses. The reason why the payroll survey likely underestimates job losses is probably related to the flawed "birth-death" model which is not actually part of the real survey but is imputed into it by Bureau of Labor Statistics statisticians.
Moreover, unlike in the previous month, the average work week did not increase while the increase in average hourly earnings held steady at a low level (however, the November increase was upwardly revised). Together with the increased loss in jobs, this means that nominal income growth likely slowed dramatically, and is likely non-existent after adjusting for inflation.
And like in the previous month, there is questions about the seasonal adjustments given last years big declines in employment, which could have been misinterpreted as seasonal rather than cyclical (or structural) by the seasonal adjustment models.
Was there anything bullish in the report then? No, not really, except for the aforementioned small upward revision of the November average hourly earnings number. And the report is also strong in a relative sense compared to late 2008 and early 2009 where we saw big drops in all relevant numbers except for average hourly earnings. The economy and the labor market is clearly not contracting in the way we saw then. However, these numbers also clearly indicates that we are not seeing a robust recovery. While the economy is probably growing, it is growing only very slowly and the labor market isn't growing at all.
While the unemployment rate was unchanged, that was only because the participation rate again dropped. The employment rate fell from 58.5% to 58.2%-the lowest since July 1983, and down from the peak level of 64.7% in April 2000. The household survey in fact said that employment fell by as much as 589,000.
The more reliable (at least when it comes to monthly fluctuations) payroll survey indicated that "merely" 85,000 jobs were lost. But that's bad enough, especially considering that the population is growing, and the fact that the household survey has tended to be a lot weaker during the latest year (Aggregate household survey job loss was 5.4 million, while the aggregate payroll survey job loss was 4.2 million) indicates that the payroll survey likely underestimates job losses. The reason why the payroll survey likely underestimates job losses is probably related to the flawed "birth-death" model which is not actually part of the real survey but is imputed into it by Bureau of Labor Statistics statisticians.
Moreover, unlike in the previous month, the average work week did not increase while the increase in average hourly earnings held steady at a low level (however, the November increase was upwardly revised). Together with the increased loss in jobs, this means that nominal income growth likely slowed dramatically, and is likely non-existent after adjusting for inflation.
And like in the previous month, there is questions about the seasonal adjustments given last years big declines in employment, which could have been misinterpreted as seasonal rather than cyclical (or structural) by the seasonal adjustment models.
Was there anything bullish in the report then? No, not really, except for the aforementioned small upward revision of the November average hourly earnings number. And the report is also strong in a relative sense compared to late 2008 and early 2009 where we saw big drops in all relevant numbers except for average hourly earnings. The economy and the labor market is clearly not contracting in the way we saw then. However, these numbers also clearly indicates that we are not seeing a robust recovery. While the economy is probably growing, it is growing only very slowly and the labor market isn't growing at all.
posted by stefankarlsson at 4:10 PM
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