The employment situation

This was another tepid employment report not much different than the reports in 2012.

Payroll employment rose 168,000 and the household survey showed a gain of only 17,000

 

Private payrolls expanded 168,000 while government employment fell 9,000.

 Perhaps more importantly the year over year change in employment is showing significant signs of weakness,  Both the household survey and payroll data show that the year over year gain in employment has peaked.


 Moreover, this weakness is appearing despite the fact that the annual benchmark revisions showed stronger employment growth in 2012 than originally reported.

 The revisions also significantly changed the pattern of hours worked in 2012.  Originally, hours worked fell well below trend in mid-2012 and were strengthening back to trend at year-end.  Now
it appears that hours worked were not as weak as originally reported. But with the average workweek unchanged in January, the January hours worked fell 0.2%.

 

 On the other hand the apparent bottoming of average hourly earnings growth  is still intact and was actually strengthening in January. 

 
 The growth in average weekly earnings fell back to only 1.2%  versus 1.7% in December and the low of 1.0% in October.  It is going to be very hard for consumer to absorb the increase in payroll and income taxes in early 2013.  Prospects for consumer spending in early 2013 do not appear promising.

 

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