The
Bureau of Labor Statistics‘ (
Observations from the employment reports include:
* The seasonal adjustment was largely responsible for
the positive headline value; we are somewhat skeptical whenever the seasonal
adjustment dwarfs the initial value.
* Goods-producing industries added 40,000 jobs; service providers: +183,000. Notable job gains occurred in leisure and hospitality (+67,000), health care (+54,700), construction (+28,000), and social assistance (+19,700). Industries with sizable job losses included temporary help services (-35,000) and state government education (-23,800). Total nonfarm employment (153.7 million) is now 1.2 million jobs above its pre-pandemic level in February 2020. Private-sector employment is 1.7 million higher than in February 2020, while government employment is 438,000 lower. That said, employment is also perhaps nearly 7.1 million below its potential if accounting for growth in the working-age population since January 2006.
Manufacturing added 8,000 jobs. That result seems consistent with the change in the Institute for Supply Management’s (ISM) manufacturing employment subindex, which resumed expanding in December. Wood products employment rose by 700 (ISM shrank); paper and paper products: -1,700 (ISM was unchanged); construction: +28,000 (ISM was unchanged).
* The number of employment-age persons not in the labor force fell (-303,000) to 99.7 million; that level is 4.7 million higher than in February 2020. Because of the above-mentioned job gains, the employment-population ratio (EPR) ticked up marginally to 60.1% -- still 1.0PP below the February 2020 level.
* Because the civilian labor force expanded by 439,0000 in December, the labor force participation rate also edged up fractionally to 62.3%. Average hourly earnings of all private employees increased by $0.09 (to $32.82), and the year-over-year increase decelerated to +4.6%. Because the average workweek for all employees on private nonfarm payrolls shrank to 34.3 hours, average weekly earnings nudged down (-$0.18) to $1,125.73 (+3.1% YoY). With the consumer price index running at an annual rate of +7.1% in November, the average worker keeps losing purchasing power. In fact, average hourly wages have lagged CPI since April 2021; average weekly wages since June 2021.
* Full-time jobs were virtually unchanged (-1,000) at 132.3 million; there are now 1.5 million more full-time jobs than in February 2020. For perspective, however, the non-institutional working-age civilian population has risen by nearly 5.2 million during that period. Workers employed part time for economic reasons (shown in the graph above) -- e.g., slack work or business conditions, or could find only part-time work -- rose by 190,000, while those working part time for non-economic reasons jumped (+402,000); multiple-job holders: +370,000. Disturbingly, since March 2022, the number of full-time employees retreated by 288,000 while all part-time (+448,000) and multi-job holders (+684,000) jumped. One interpretation of those data is that net job gains since March have been dominated by those who have to hold down multiple jobs just to make ends meet, along with those who are only marginally attached to the labor force by virtue of their choice to work part time for non-economic reasons (+738,000).
For a “sanity test” of the job numbers, we consult
employment withholding taxes published by the U.S.
Treasury. Although “noisy” and highly
seasonal, the data show the amount withheld in December jumped by $102.4 billion,
to $339.9 billion (+43.1% MoM; -3.2% YoY). To reduce some of the monthly volatility
and determine broader trends, we average the most recent three months of data
and estimate a percentage change from the same months in the previous year; the
average of the three months ending December was 1.2% above the year-earlier
average. Since there are many reasons why withholding is typically highest
during December (e.g., self-employed workers reconciling withholding at year’s
end), we think the YoY comparison of the three-month moving average better
reflects present employment trends.
The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.
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