Before December Report (since January 2002):
– Total increase in employment per the Household Survey (used as basis for the unemployment rate): 9,866,000
– Total increase in employment per the Establishment Survey (new jobs number typically reported as “the” result): 5,410,000
– The ADP Employment Report for December came in at minus-40,000 net new jobs on Wednesday.
– This AP report from early in the week at MSNBC pegged expectations at 110,000 and unemployment to stay at 4.5%.
– Updated expectations after ADP’s bucket of cold water were noted as plus-100,000 here. An HSBC economist quoted here is predicting plus-70,000. Last-minute predictors came in at plus-115,000.
The actuals (Bureau of Labor Statistics press release is here):
- Unemployment rate: 4.5% (unchanged)
- Increase in total employment during December per the Household Survey: +303,000
- Increase in employment during December per the Establishment Survey: +167,000
- Revisions to the previous months’ Establishment Surveys net new jobs numbers: October – plus 7,000 (from 79,000 to 86,000); November – plus 22,000 (from 132,000 to 154,000)
- Total increase in employment reported in the December Establishment survey: 196,000 (167 + 7 + 22)
With December Data (since January 2002):
- Total increase in employment per the Household Survey: 10,225,000, after some revisions to seasonal adjustment factors (almost 1.6 million in the last five months!)
- Total increase in employment per the Establishment Survey: 5,606,000
9:35 AM — Comment:
After the clearly false early warning from ADP, the employment pickup is stunning. The Household Survey employment increases continues to dwarf those of the Establishment Survey. Given the increases in real wages that have been reported in the past year or so, I think the explosive growth of the Household Survey employment number in the past four months is telling us that a lot of people who were voluntarily out of the workforce are flooding back in because they’re finding jobs with acceptable pay (by whatever definition they’re using).
It’s hard to see how anyone can be displeased with this. In fact (and I’m deliberately not looking until after I type this), it’s so good the market might think it’s TOO good, which would be pretty funny given all the talk of “slowing” that the business press continues to report. Overall, the economy continues to just keep humming along.
This report, the turnaround in the Manufacturing ISM, the continued strength of the Services ISM, and the pretty good/not great Christmas season retail results all makes me pretty confident that the GDP growth for the fourth quarter will come in at 3% or better — but these indicators have fooled me before.
10:00 AM — Comment:
From Nasdaq.com — early reading on the market’s opening –
9:40 AM — As expected, stocks stumble out of the gate as surprisingly strong jobs growth is not enough to offset reduced expectations of a Fed easing anytime soon. A profit warning in the tech sector, some notable analyst downgrades and a burgeoning sense that the market is ripe for a pullback of some sort are also contributing to the negative disposition.
Before the bell, the Labor Dept. showed that nonfarm payrolls unexpectedly rose 167K, easing worries about a weakening economy. However, with the Fed concerned that the high level of resource utilization has the potential to sustain inflation pressures, a larger than expected rise in hourly earnings, and what it can mean for Fed policy, is acting as an offset to the biggest payroll gain in eight months.
So the market is OK with employment growth, worried about wage increases, worried that the Fed isn’t going to ease rates (get used to it people; I don’t see Bernanke easing for several months at least), and is worried about earnings reports. Markets are supposed to worry; the time to get concerned is when they stop worrying, because then you get bubbles.
10:15 AM – Media reax roundup:
Associated Press at “MyWay” — turns good news into bad news as usual:
NEW YORK (AP) â€” A surprising surge in job creation and wages sent stock and Treasury prices falling Friday as investors saw their hopes for an interest rate cut dwindling.
The markets shuddered at the Labor Department’s report that U.S. employers increased their payrolls by 167,000 in December and boosted workers’ hourly wages by 0.5 percent.
Associated Press at Fox — clearly more factual and grounded, with one questionable dig:
Employers stepped up hiring last month, boosting payrolls by a brisk 167,000 and keeping the unemployment rate steady at a still historically low 4.5 percent. Workers’ wages grew briskly.
The latest snapshot of the nation’s employment climate, released Friday by the Labor Department, showed that the jobs market ended 2006 on a strong note and provided fresh evidence that the troubled housing and automotive sectors aren’t dragging down employment across the country.
With the economy losing momentum, though, many economists predict the jobless rate will climb this year and average around 4.9 percent.
And the evidence of “losing momentum” is, uh where?
Reuters’ Glenn Somerville came in with the facts, and found a pretty bullish analyst:
The U.S. economy added a surprisingly strong 167,000 jobs in December, according to a government report on Friday showing a jump in pay that may fan concerns by policy-makers who fear a strong job market could ignite inflation.
The Labor Department also revised hiring up for each of the two prior months from previous estimates. The unemployment rate in December was 4.5 percent, unchanged from November.
….. “The manufacturing side of the economy may be weak, but the rest of the economy is strong and that suggests that we’re probably going to see continued good economic growth in the months ahead,” said Gary Thayer, chief economist for A.G. Edwards and Sons Inc. in St. Louis.
Thayer added that he expected the Federal Reserve to keep U.S. interest rates on hold “for the foreseeable future.”
UPDATE, 5PM: Zheesh — “Stocks Fall on Hot Payroll Data”