December jobs report: 2018 goes out with a bang

December jobs report: 2018 goes out with a bang

  • +312,000 jobs added
  • U3 unemployment rate rose +0.2% from 3.7% to 3.9%
  • U6 underemployment rate unchanged at 7.6%

Here are the headlines on wages and the broader measures of underemployment:

Wages and participation rates

  • Not in Labor Force, but Want a Job Now:  declined -70,000 from 5.397 million to 5.327 million
  • Part time for economic reasons: declined – 124,000 from 4.781 million to 4.657 million
  • Employment/population ratio ages 25-54: unchanged at 79.7%
  • Average Hourly Earnings for Production and Nonsupervisory Personnel: rose $.09 from  $22.95 to $23.05, up +3.4% YoY.  (Note: you may be reading different information about wages elsewhere. They are citing average wages for all private workers. I use wages for nonsupervisory personnel, to come closer to the situation for ordinary workers.)
Holding Trump accountable on manufacturing and mining jobs

 Trump specifically campaigned on bringing back manufacturing and mining jobs.  Is he keeping this promise?  

  • Manufacturing jobs rose +32,000 for an average of +24.000/month in the past year vs. the last seven years of Obama’s presidency in which an average of +10,300 manufacturing jobs were added each month.
  • Coal mining jobs rose +600 for an average of +175/month vs. the last seven years of Obama’s presidency in which an average of -300 jobs were lost each month

October was revised upward by +21,000. November was also revised upward by +37,000, for a net change of +56,000.

The more leading numbers in the report tell us about where the economy is likely to be a few months from now. These were positive.

  • the average manufacturing workweek rose +0.1 hours from 40.8 hours to 40.9 hours. This is one of the 10 components of the LEI.
  • construction jobs rose by +32,000. YoY construction jobs are up +284,000.
  • temporary jobs rose by +10,300. The strong YoY trend remains intact.
  • the number of people unemployed for 5 weeks or less fell by -2,000 from 2,128,000 to 2,126,000.  The post-recession low was set seven months ago at 2,034,000.

Other important coincident indicators help  us paint a more complete picture of the present:

  • Overtime rose +0.1 hour from 3.5 hours to 3.6 hours.
  • Professional and business employment (generally higher-paying jobs) increased by +43,000 and  is up +583,000 YoY.
  • the index of aggregate hours worked for non-managerial workers rose by 0.3%.
  •  the index of aggregate payrolls for non-managerial workers rose by 0.7%.
Other news included:
  • the  alternate jobs number contained  in the more volatile household survey increased by 180,000  jobs.  This represents an increase of 2,880,000 jobs YoY vs. 2,638,000 in the establishment survey.
  • Government jobs increased by +11,000.
  • the overall employment to population ratio for all ages 16 and up remained at 60.6% m/m and is up 0.4% YoY.
  • The labor force participation rate rose +0.2% from 62.9% m/m to 63.1% and is up +0.4% YoY.


This was a blockbuster report. About the only negative is the increase in the headline unemployment rate, which may be an artifact of the year-end household survey rebalancing (rather than revise each of the last 12 months, they simply add the revisions into the January number).

Everything else, including the leading portions of the report, was positive to strongly positive. At first glance, the gains look widespread, but I’ll update if necessary once I am able to take a longer look. The gains to ordinary workers nominal wages are particularly welcome. UPDATE: The gains are widespread, but particularly so in education, healthcare,  leisure and hospitality, and somewhat in construction.

Needless to say, this report is in stark contrast to what many of the leading indicators are telling us. Since employment and production are the Queen and King of coincident indicators, respectively, I think workers will need to enjoy this while it lasts. Now would be a good time to start preparing for the downshift in trend that I think is inevitable at this point.