Three Bad Signals in the December Jobs Report

Anemic job growth, declining labor force participation and declining average weekly hours of work all point to a labor market the continues to struggle for good omens. The comment from the BLS Employment Situation for December is that total nonfarm payroll employment “edged” up +74,000. Evidently the synonym for edge is “barely increased at all and was much lower than anticipated.”  See the first estimate in the Net Employment Change chart. The Establishment data shows employment for November was revised up from 203,000 to 241,000, while the final estimate for October employment remained at 200,000. Wrapping up 2013, job growth averaged 182,000 per month, almost exactly the same as in 2012 (183,000 per month).

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Private employment was up +87,000 while Government jobs declined by -13,000. The largest gains overall came in Private Service Producing, +90,000; with Retail (+55,300) and Wholesale (+15,400) Trade leading the way. Construction employment fell -16,000.

The Household Survey indicates that the combination of a decline in the labor force -347,000 (also a decline in the labor force participation rate to 62.8 from 63.0), and a decrease in the number of people unemployed, -490,000, gave rise to a decline in the unemployment rate to 6.7% from 7.0%. The unemployment rate one year ago was 7.9%. So, while this bellwether statistic has shown marked improvement over the past twelve months, the labor market still seems troubled. Initial claims have bounced.  Of course, the extremely cold weather throughout much of the country has certainly affected many of the variables in question over the past month.

The average length of the workweek declined slightly and average earnings increased by 1.8% – less than in recent months.

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