The unemployment rate fell by 0.4 percentage point to 8.6 percent in November, andnonfarm payroll employment rose by 120,000, the U.S. Bureau of Labor Statisticsreported today. Employment continued to trend up in retail trade, leisure andhospitality, professional and business services, and health care. Governmentemployment continued to trend down.So far, so good. Now let's look at the details:
In November, the unemployment rate declined by 0.4 percentage point to 8.6 percent.From April through October, the rate held in a narrow range from 9.0 to 9.2 percent.The number of unemployed persons, at 13.3 million, was down by 594,000 in November.The labor force, which is the sum of the unemployed and employed, was down by alittle more than half that amount.This takes a bit of an explanation. The unemployment rate is derived from the household survey, which gives us several important employment numbers. First, we get the civilian labor force, which comprises the denominator of the unemployment fraction (The civilian labor force is the total number of employed and unemployed people in the country). This amount decreased by 315,000. In addition, the number of employed in the household survey increased by 278,000 while the number of unemployed decreased by 594,000. Finally, the "not in the labor force" number increased by 487,000 (also remember that this number is horribly misunderstood and misrepresented. The increase could have just as easily been caused by an increase in the number of people retiring as from people giving up looking).
So putting this all together, we get the following:
More people are working (+278,000)
Fewer people are unemployed (-594,000) -- this number was a little more than twice the number of people employed.
The denominator of the equation decreased.
Overall, not bad. Some of the decrease was actually do to people not being unemployed.
Expect more discussion about the labor force participation rate from this report -- which decreased to 64%. I've discussed this before, but it bears repeating; we're now in an age when baby boomers are retiring -- meaning this number will probably be lower for the foreseeable future (in fact, I would argue the shape of the labor force has fundamentally changed because of this).
Let's move onto the establishment data:
Employment in retail trade rose by 50,000 in November, with much of the increaseoccurring in clothing and clothing accessories stores (+27,000) and in electronicsand appliance stores (+5,000). Since reaching an employment trough in December 2009,retailers have added an average of 14,000 jobs per month.
Employment in leisure and hospitality continued to trend up in November (+22,000).Within the industry, food services and drinking places added 33,000 jobs. This gainmore than offset a loss of 12,000 jobs in the accommodation industry. In the last12 months, leisure and hospitality added 253,000 jobs, largely driven by employmentincreases in food services and drinking places.
Employment in professional and business services continued to trend up in November(+33,000). Modest job gains continued in temporary help services.Health care employment continued to rise in November (+17,000). Within the industry,hospitals added 9,000 jobs. Over the past 12 months, health care has added an averageof 27,000 jobs per month.
Manufacturing employment changed little over the month and has remained essentiallyunchanged since July. In November, fabricated metal products added 8,000 jobs, whileelectronic instruments lost 2,000 jobs.
Construction employment showed little movement in November. Employment in theindustry has shown little change, on net, since early 2010.We see an overall improvement across the board in the establishment survey, with the exception of government employment.
Government employment continued to trend down in November, with a decline in the U.S.Postal Service (-5,000). Employment in both state government and local government hasbeen trending down since the second half of 2008.
On a scale of 1-10, I'd give this a 5.5.
-------------
NDD here with a few additional comments:
The best news is the continuing upward revisions of past reports. September and October were revised up a total of 72,000. For the last three months, the average gain was 143,000.
The more volatile household survey employment measure showed a gain of 278,000 in November on top of a gain of 277,000 in October. Since the household survey tends to lead at inflection points, these are very good numbers.
While the decline in the labor force will be trumpeted by bearish sites, this is responsible for only half of the .4 decline in the unemployment rate.
There were negatives, though. (1) Average hourly earnings actually decreased $.02. This is another reinforcing shot of real wage deflation. (2) The manufacturing workweek declined 2/10's of an hour. This is one of the 10 LEI, and is a significant negative although it just took back last month's gain. Over a longer period, this series is now trending sideways. (3) Only 2000 manufacturing jobs were added. This leading series is also trending sideways. (4) There was a slight decline in aggregate hours worked, although the longer trend remains strongly higher.
My bottom line is that the economy is once again showing strength - but this will once again trigger the Oil choke collar.
12 comments:
For all of the back and forth about stimulus versus letting things be, isn't the reality that our long term growth picture is completely fubar unless we find a solution to the oil choke collar?
What we keep seeing is that every time the economy gives the slightest hint of real improvement oil prices go up and stall us out again. Sure there are other factors causing issues right now, but does anybody think we'd be having all of these problems if oil was humming along at say $50/barrel?
What worries me is that the price of oil seems to be largely off the radar as something that needs to be addressed. It seems to be largely left to the invisible hand to work this out, but the likely result of that will be worsening spikes in prices, volatility and a declining economy. What we need is a broad based effort to move way from oil dependency and we aren't getting anything near that.
Steve - The truth is there is no solution to the oil choke collar. If alternative energy (water, wind, solar) was the answer, the problem would have been resolved a long time ago. The problem with all those alternative sources is twofold - First we don't have any ability to store wind energy and solar energy on a widespread scale. Oil, on the other hand, can easily be stored in liquid form in your gas tank. Second, the sun does not shine at night and the wind does not blow at all times. Oil, however, powers your auto day or night, rain or shine, wind or no wind. While I do bleieve the oil companies have done everything possible to delay the development of alternative energey, if it was a great a possibility as it is made out to be, they wouldn't be able to. It's just not. Which means we are in deep trouble over the next 40-50 years.
To your points anonymous:
http://www.cnet.com/8300-5_1-0.html?categoryId=9935862
If storage technology is the only hinderance, then there is hope. Fortunately the need for portable power has been pushing research into battery technology. That lead to hybrid and electric cars being viable. That can further lead to providing a way to store the power from solar and wind.
Dr. Bill on radio station KGO out of California has been pushing natural gas for autos and specifically calling for government to require their autos to run on it, thereby forcing the stations around the country to carry it. For some reason the oil companies aren't getting on board. Heheh!
Thanks Steve for your link. The problem is the alternative technology is not coming on line fast enough no matter how much these companies speed up their efforts to bring it to market. Furthermore, oil is so widespread in industry (plastics, jet fuel, etc.) that replacving the source of energy on the car is useful but not sufficient to resolve the problem long term.
Well that's precisely my point. Nobody with the power to accelerate those developments seems to be making a serious effort to do so. The efforts we've made towards green energy have been rather paltry, especially given the situation we're facing.
I think we could get out of this if we collectively worked on it, but sadly it doesn't seem like we're going to do that. We'll just slam into the wall at high speed and wonder why nobody installed brakes in our ferrari.
This is probably a dumb question, but why didnt the "oil choke collar" exist in the 1990s? I agree with you, Steve, it's frustrating to see oil go up at the slightet hint of economic improvement.
And yet, the economy soared in the 1990s, and oil and gas remained much, much cheaper. Why is that? What changed so radically in 15-20 years or so?
J - I think "peak oil" hit around 2005. Google it.
BoulderPatentGuy is absolutely correct. From the discovery of oil to 2005 when we hit peak oil, it was a buyer's market. Having hit the peak, it's shifted to a permanent seller's market.
Steve S.: I do understand where you are coming from, but I think I am not expressing myself well. No matter what they do, it won't be sufficient. The reason is that oil is such a good source of energy (arguably the best ever found for a variety of reasons) that anything that replaces it will never match up. I highly recommend you read "The End of Growth" by Richard Heinberg for more information on this topic.
No you are expressing yourself fine. My perspective though is that simply accepting we're fucked isn't really a viable option.
The reality is that the sun is and always has been the greatest source of energy available to us. Ultimately it is what made all that oil and coal in the first place. But that's a bit of an abstract point so let me get to what I think is an actual long term solution.
There needs to be a very radical shift in how our society and economy works. We need our energy to be more real-time. That is, we've been using energy that was stored in the ground millenia ago and creating a kind of energy bubble if you will. We've been burning through energy at a rate that isn't sustainable in the long run and that's our problem today.
What I see on the horizon is a radical shift in how our world works, but I don't think it's the end times like I see in a lot of peak oil writings. What we are heading towards is a world built on real-time energy. What we have today is a world built on historic energy, energy stored in the ground millions of years ago that we've dug up to create a kind of energy bubble.
There is nothing we do today with oil that we can't do tomorrow without oil. The issue that we face is a matter of transition and scalability. We can drive cars, power homes and make plastics without needing to dig up a single rotting dinosaur. The struggle we face is that the economy of that future is going to necessarily be radically different.
Steve: I actually agree with you. Where we disagree is on the transition. We will reach that world built on real-time energy, but due to lack of political will and corporate greed, the transition will be extremely painful when it does not have to be.
Then we are in agreement :)
Post a Comment