December Jobs Report: an emblematic end to 2019

 - by New Deal democrat

HEADLINES: 

• +145,000 jobs added
• U3 unemployment rate unchanged at 3.5%
• U6 underemployment rate declined -0.2% from 6.9% to 6.7%

Leading employment indicators of a slowdown or recession

I am highlighting these because many leading indicators overall have strongly suggested that an employment slowdown is here. The following more leading numbers in the report tell us about where the economy is likely to be a few months from now. These were mixed:

• the average manufacturing workweek was unchanged at 0.1 hour at 40.5 hours (up +0.1% with revision). This is one of the 10 components of the LEI and is positive including the revision.

• Manufacturing jobs declined by -12,000. Manufacturing gained 46,000 jobs in 2019, a sharp deceleration from 2018’s pace of 264,000.
• construction jobs rose by 20,000. In 2019 construction jobs were up 151,000, also a deceleration from 207,000 in 2018. Residential construction jobs, which are even more leading, fell by -1100.

• temporary jobs rose by 6400. 
• the number of people unemployed for 5 weeks or less increased by 39,000 from 2,020,000 to 2,065,000.

Wages and participation rates

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

• Not in Labor Force, but Want a Job Now: unchanged at 4.832 million
• Part time for economic reasons: decreased by -140,000 from 4.322 million to 4.182 million 
• Employment/population ratio ages 25-54: rose +0.1% from 80.3% to 80.4%
• Average Hourly Earnings for Production and Nonsupervisory Personnel: rose $.02 to $23.79, up +3.0% YoY - a sharp deceleration from recent YoY growth. (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 an average of 4000/month in 2019 vs. the last seven years of Obama's presidency in which an average of +10,300 manufacturing jobs were added each month. This is a sharp deceleration.
• Coal mining jobs decreased by -1200, and an average of -58 jobs/month in the past year vs. the last seven years of Obama's presidency in which an average of -300 jobs were lost each month

October was revised downward by -4,000. November was also revised downward by -10,000, for a net change of -14,000.

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

• Overtime was unchanged at a +0.1 upwardly revised 3.2  hours
• Professional and business employment (generally higher-paying jobs) rose by 10,000 and  was up +397,000 in 2019, a deceleration from 561,000 in 2018. 
• the index of aggregate hours worked for non-managerial workers rose by 0.1%

•  the index of aggregate payrolls for non-managerial workers rose by 0.2%  

Other news included:            

• the alternate jobs number contained  in the more volatile household survey rose by 267,000  jobs.  This represents an increase of 1,778,000 jobs YoY vs. 2,180,000 in the establishment survey. 
• Government jobs rose by 6,000.

• the overall employment to population ratio for all ages 16 and up was unchanged at 61.0% and was up 0.4% in 2019.    
• The labor force participation rate was unchanged at 63.2% and was up 0.2% in 2019.

SUMMARY

This report was emblematic of all of 2019. There was deceleration or decline in most of the leading sectors, adding up to a sharp deceleration for the year. Meanwhile the headline coincident data was positive or at least equal to the best levels of the expansion. Prime age work force participation continued to increase. 

If there was a surprise, and it was a nasty negative one, it is that average hourly wages for non-managerial personnel suddenly declined to +3.0% YoY.

Basically, the jobs market is in pretty good shape at the moment - except for the sectors which have historically led the rest. There is nothing in this report to suggest any imminent recession, but also nothing to suggest an acceleration from the recent slowdown.