- by New Deal democrat
There were three big questions I had going into this jobs report:
1. whether the big decrease in new jobless claims to a half century low would translate to another big top line number in the jobs report
2. is wage growth holding up? Is it accelerating?
3. Would last month’s “poor” 210,000 number of new jobs be revised higher?
The answers were:
1. The 6 month average of monthly gains has declined significantly, from about 600,000 to 500,000 - still very good, but a significant deceleration in the past 2 months. We still have 3.6 million jobs to go to equal the number of employees in February 2020 just before the pandemic hit. At the current average rate for the past 6 months, that’s about 7 more months.
2. Wage growth is still very high, at 5.8% YoY, a slight deceleration from last month.
3. Both of the last 2 months were revised higher, but November’s revision was only +39,000, still disappointing.
Here’s my in depth synopsis of the report:
Leading employment indicators of a slowdown or recession
These are leading sectors for the economy overall, and will help us gauge how strong the rebound from the pandemic will be. These were on balance positive:
Wages of non-managerial workers
Aggregate hours and wages:
Other significant data:
Two days ago I described the November JOLTS report as being analogous to a reverse game of musical chairs, with jobs being the chairs and potential employees those wanting to sit in them. With a chronic shortage of people being willing to sit in the chairs on offer due to the pandemic, jobs are going unfilled, while virtually nobody is getting laid off.
Today we learned that the dynamic continued in December, as the unemployment rate fell close to its 50 year lows, at a level only exceeded by one month in 2000, and during 2018-19. This also continued the dynamic of sharp wage increases for non managerial workers.
White collar professional jobs have almost fully recovered to pre-pandemic levels. Construction is not far behind. What are lagging are leisure and hospitality jobs most hard hit by pandemic issues, and - surprisingly - manufacturing. That health care is losing workers while the pandemic is at one of its worst levels is a demonstration of the failure of how the US has been dealing with the pandemic, as Trumpist courts and governors are refusing virtually all efforts at mitigation, and vaccinations are nowhere near the level needed for safety. The Biden Administration is not blameless, as its “vaccination-only” strategy has not worked.
It is also somewhat concerning that the last two months have only averaged a little over 200,000 jobs gained. But the household report, which tends to lead at inflection points, has been *very strong,* and October’s initial gain of 531,000 has since been revised up to 648,000. I suspect that seasonality has reared its ugly head, as the huge number of Christmas holiday jobs typically added has thrown a monkey wrench into pandemic calculations. If so, next month the report for this month (January) will reverse that.
All in all, the jobs sector continues strong, and is getting very tight, but still lagging in terms of filling job openings created by pandemic losses.
The final pieces of the employment picture will not resolve until the pandemic is resolved.