December jobs report: I told you so – jobs actually declined in December, BUT employment primed for takeoff once pandemic abates
Important: There was a huge amount of seasonality in this report. This is common for December, but the issue was greatly exacerbated because of the outsized impact of the pandemic. Take the large changes in some of the data with many grains of salt.
I have been warning for almost 4 weeks that the December employment report might have a negative number. It did. At the same time, the internals are not nearly so bad as the headline.
- -140,000 million jobs lost, 95,000 of which were in the private sector and 55,000 were in government. Comparatively, there were 22.1 million job losses in March and April. The alternate, and more volatile measure in the household report indicated a gain of 21,000 jobs, which factors into the unemployment and underemployment rates below.
- U3 unemployment rate was unchanged at 6.7%, compared with the January low of 3.5%.
- U6 underemployment rate fell -0.3% from 12.0% to 11.7%, compared with the January low of 6.9%.
- Those on temporary layoff increased 277,000 to 3,039,000.
- Permanent job losers decreased by -348,000 to 3,370,000.
- October was revised upward by 44,000. November was also revised upward by 95,000 respectively, for a net gain of 135,000 jobs compared with previous reports.
Leading employment indicators of a slowdown or recessionI am still highlighting these because of their leading nature for the economy overall. These were generally positive:
- the average manufacturing workweek was unchanged at 40.2 hours. This is one of the 10 components of the LEI.
- Manufacturing jobs increased by 38,000. Manufacturing has still lost -543,000 jobs in the past 10 months, or -4.2% of the total. About 60% of the total loss of 10.6% has been regained.
- Construction jobs increased by 51,000. Even so, in the past 10 months -226,000 construction jobs have been lost, -30% of the total. About 80% of the worst loss of 15.2% loss has been regained.
- Residential construction jobs, which are even more leading, rose by 8,900. Since February there have now been actual job *gains,* to the tune of 6,400 jobs, to a new 10 year+ high.
- temporary jobs rose by 67,600. Since February, there have still been -213,500 jobs lost, or -7.3% of all temporary help jobs.
- the number of people unemployed for 5 weeks or less rose by 849,000 to million, compared with April’s total of 14.283 million.
- Professional and business employment rose by 161,000, which is still -858,000, or about 4% below its February peak.
Wages of non-managerial workers
- Average Hourly Earnings for Production and Nonsupervisory Personnel: rose $0.20 from $24.89 to $25.09, which is a gain of 5.2%(!) in the 10 months since the pandemic began. As with last March and April, these gains reflect that job losses occurred primarily among lower wage earners, who since May had been disproportionately recalled to work.
Aggregate hours and wages:
- the index of aggregate hours worked for non-managerial workers declined by -0.1%. In the past 10 months combined this has nevertheless fallen by about -6%.
- the index of aggregate payrolls for non-managerial workers rose by 0.7%. In the past 10 months combined this has nevertheless fallen by about -1.6%. Still, about 90% of the loss from February to April has been made back up.
Other significant data:
- Full time jobs gained 397,000 in the household report.
- Part time jobs declined -471,000 in the household report.
- The number of job holders who were part time for economic reasons decreased by -332,000 to 4.891 million. This is still an increase since February of 1,772,000.
While the headline was a negative number, this was almost entirely due to huge declines of -372,000 in food and beverage establishments, and another -92,000 in amusement and recreation. Private education lost -63,000, and there were also sizable losses in local and state government.
In contrast, all of the leading job groups showed equally sizable gains, and residential construction employment made a new decade-plus high. Among leading employment indicators, only the increase in short term unemployment was negative.
Full-time jobs also showed gains, while part-time jobs showed losses. Aggregate and average payrolls also rose sharply. While the average hourly wage increase can be put down to the heavily skewed nature of the new job losses, the aggregate increase which includes the total from all jobs, is a big positive, probably reflecting some annual raises.
This is an absolutely poor report as to current conditions, particularly 10 months into the pandemic. On the other hand, the leading sectors once again show that the economy – including employment – is primed for takeoff once the pandemic is brought under control.