The December Employment Situation Summary (011014): 74K SA Job Adds, Unemployment Rate at 6.7%, Participation Rate Drops Again
- ISM Manufacturing — 57.0% in December, down from 57.9% in November.
- ISM Non-Manufacturing — 53.0% in December, down from 53.9% in November.
- Auto Sales — only up by 0.3% year-over-year in December; overall, 2013 was 7.6 percent higher than 2012. GM was down by 6.3% in December; Toyota was down by 1.7%. Ford and Chrysler were at +1.7% and +5.7%, respectively.
- ADP Private-Sector Payroll — 238,000 jobs added in December
- Initial Unemployment Claims: a seasonally adjusted 330,000 yesterday; 345,000 a week ago.
- Mark Zandi of Moody’s, in Wednesday’s ADP conference call — 230,000 seasonally adjusted jobs added, unemployment rate staying at 7.0%.
- Bloomberg — 197,000 jobs, 7% unemployment.
- Reuters — 196,000 jobs, 7% unemployment. Reuters emphasized that their poll was done before ADP’s report came out.
- Associated Press — same as Reuters.
Not seasonally adjusted benchmarks:
Here’s a look at the raw (i.e., not seasonally adjusted) and seasonally adjusted numbers for the past 12 years:
This one’s difficult to peg, because it looks like the seasonal trends are now significantly different from the middle of last decade, last time the economy was in really good shape — either that, or a consistently mediocre economy generates significantly different seasonal trends.
I’ll go with the latter in benchmarking. Evidence of genuine improvement would mean 25,000 or fewer jobs actually lost overall, and 75,000 or more jobs gained in the private sector.
This is one of those reports where the seasonally adjusted number may not reflect the underlying reality very well, e.g., note how better raw results in December 2012 compared to December 2011 (+78K overall and +50K in the private sector) somehow generated lower December 2012 seasonally adjusted results (-11K and -25K, respectively).
Other items to watch for:
- Labor force growth or contraction.
- Continued divergence between the Household and Establishment Surveys on jobs added.
- Part-time vs. full-time job adds.
- Which industries are picking up jobs.
- The workforce participation rate, especially since Gallup is foreshadowing a possible drop in that already historically low figure.
The report will be here at 8:30.
HERE IT IS (permanent link): More of the same, it would appear. That is, a lower unemployment rate despite little job growth (pending a closer look, of course) —
The unemployment rate declined from 7.0 percent to 6.7 percent in December, while total nonfarm payroll employment edged up (+74,000), the U.S. Bureau of Labor Statistics reported today. Employment rose in retail trade and wholesale trade but was down in information.
Household Survey Data
The number of unemployed persons declined by 490,000 to 10.4 million in December, and the unemployment rate declined by 0.3 percentage point to 6.7 percent. Over the year, the number of unemployed persons and the
unemployment rate were down by 1.9 million and 1.2 percentage points, respectively.
Among the major worker groups, the unemployment rates for adult men (6.3 percent) and whites (5.9 percent) declined in December. The rates for adult women (6.0 percent), teenagers (20.2 percent), blacks (11.9 percent), and Hispanics (8.3 percent) showed little change. The jobless rate for Asians was 4.1 percent (not seasonally adjusted), down by 2.5 percentage points over the year.
… Establishment Survey Data
Total nonfarm payroll employment edged up in December (+74,000). In 2013, job growth averaged 182,000 per month, about the same as in 2012 (+183,000 per month). In December, job gains occurred in retail trade and wholesale trade, while employment declined in information.
Employment in retail trade rose by 55,000 in December.
… Employment in professional and business services continued to trend up in December (+19,000). In 2013, job growth in professional and business services averaged 53,000 per month. Within the industry, temporary help services added 40,000 jobs in December, while employment in accounting and bookkeeping services declined by 25,000.
… Construction employment edged down in December (-16,000).
… The average workweek for all employees on private nonfarm payrolls edged down by 0.1 hour to 34.4 hours in December.
… The change in total nonfarm payroll employment for October remained at +200,000, and the change for November was revised from +203,000 to +241,000.
So the seasonally adjusted job adds dropped by over two-thirds from November to December (241K to 78K).
Let’s look at the not seasonally adjusted results … they really, really stink:
The overall actual loss of 246,000 jobs missed its -25K benchmark by 221,000 jobs. In the private sector, the actual loss of 120,000 came in 195,000 worse than the +75,000 benchmark. These are huge setbacks compared to what needed to happen.
Now let’s look at a few Household Survey/unemployment rate-related items:
- (Table A-1) The labor force dropped by 347K, and is 548K below where it was a year ago. The labor force participation rate dropped to an almost unfathomable 62.8%. “Not in labor force” increased by 525K to an all-time record 91.8 million.
- (Table A-9) Full-timers went up by 1.543 million in 2013. Part-timers decreased by 188K. The net is 1.355 million. But the Establishment survey (Table B-1) says employment is up by 2.186 million. My theory is that the Establishment Survey’s higher result has a lot of people who are part-timers that the Household Survey isn’t picking up.
- (Table B-1) There are several items which strongly differ from what ADP reported on Wednesday. One of the most obvious is construction. ADP had (not kidding) +48K; BLS had -16K.
- (Also Table B-1) The seasonally adjusted temporary help services adds of 40.4K are well over half of ALL seasonally adjusted jobs adds.
- (Table A-15) Interesting that the “official” unemployment rate went down, but the fully-loaded U-6 rate stayed at 13.1%.
My overall reaction to this is that we’re turning into a zombie economy.
UPDATE: Zero Hedge is calling BS on Mark Zandi’s ADP conference call comments:
ADP’s Mark Zandi went on the record to say that “The job market ended 2013 on a high note. Job gains are broad-based across industries, most notably in construction and manufacturing. It appears that businesses are growing more confident and increasing their hiring.” It appears not.
I thought Zandi’s assessment was overly rosy (“The job market has kicked into a higher gear”). He claimed to base his take partly on actual discussions with businesspeople. I wonder which ones?
UPDATE 2: Also at Zero Hedge — “The good news: the unemployment rate plunged to 6.7% from 7.0%… For all the wrong reasons – the number of people not in the labor force rose to a record 91,808,000. As a reason for the plunge the BLS says there was a major weather effect seen on the forced part-time series, and notes the decline in healthcare which is rare and part of the sector slowing. Thank you Obamacare.”
UPDATE 3: CNBC — “The monthly job creation was the worst in nearly three years.”
Oh, and here’s Zandi: “Economists Mark Zandi and Austan Goolsbee said on CNBC that the numbers shouldn’t be taken seriously and likely will be revised higher in future counts.” A Conference Board economist is also claiming that the weak month “stands in contrast to the strengthening posted in other major economic data, suggesting the dip in hiring might prove temporary.”
Looking at the upated tables above, the overall job market went from +81K vs. a year ago in November (476K vs. 395K) to MINUS 170K (from -76K to -246K). That’s a one-month negative swing of a quarter million (from +81K to -170K).
So maybe BLS did miss some job creation (they had no trouble finding a lot of temps, did they?), and we’ll see December revised upward. Or maybe this is the start of a serious meltdown. I don’t think Zandi and others who are downplaying today’s bad news really know —how can they, when there is no precedent for gauging the potential impact of Obamacare? — and that they’re putting on brave fronts.
UPDATE 4: This CNBC video shows Zandi going all-in, still insisting, as he did on Wednesday, that “we’ve turned the corner.”