Friday, January 5, 2018
The much-anticipated monthly employment report from the Bureau of Labor Statistics (BLS) was released today ahead of the opening bell, and the headline results, at first blush, look a little disappointing: 148K new non-farm payroll jobs were reportedly created in the month of December, beneath the analyst consensus of around 180K. The unemployment rate remained steady at 4.1%, a 17-year low.
However, just because this jobs total did not hit consensus, it’s still tens of thousands of jobs to the positive — that is, the current U.S. labor market only needs around 80K-100K new jobs per month to keep growing. Further, we see a big upward revision in November’s BLS headline, from 228K initially reported to 252K this morning. That said, we see these gains offset by a downward revision in October: 244K to 211K.
The important places to drill down into this data do reveal good news relative to the disappointing headline: Average Hourly Earnings, an important metric tracking long-dormant wage growth, rose 0.3% in December — up from the +0.1% in November and pushing the year-over-year tally to 2.5%. And with the recently passed tax cuts to corporations, at this level of near-full employment, we look toward wage growth increasing even further in the months to come.
Healthcare, unsurprisingly, brought in 31K new jobs last month — it also led the ADP ADP private sector jobs totals released yesterday. (ADP’s numbers were far higher than today’s BLS totals, however. These surveys tend to tack closer together over future revisions, and ADP is also known by some analysts to overstate December numbers, partially on holiday shopping season in the Retail space.) But importantly, Construction and Manufacturing — two sectors that have struggled to keep up with the rest of the economy over he past few years — gained 30K and 25K new jobs last month, respectively.
Retail last month brought the biggest disappointment, losing 20K jobs in the month. Considering holiday shopping season, when retailers traditionally add temporary jobs in the stores for the influx of shoppers, this number seems like something of an anomaly. But take a look at Warehousing, +30K in December, and the view becomes a bit clearer: there is no bigger warehouser in America than Amazon AMZN, and no retailer sold more goods for the holidays.
Also, unemployment for African Americans fell to 6.8% last month, reportedly the lowest in the history of he BLS report (1971). The U-6 (aka “real unemployment”) remained steady at 8.1%, also historically low. And the Labor Force Participation Rate equalled the previous month’s 62.7%.
In short, there is plenty here to hang our economic hat on. Perhaps we’ll even see some positive revisions to the negative number in the Retail sector, who knows? In any case, not bad news for the market — especially considering unemployment holding steady at 4.1% is not expected to change anyone’s opinion at the Fed regarding interest rates at this point.
Mark Vickery
Senior Editor
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