Friday, January 05, 2018

Comments on December Employment Report

by Bill McBride on 1/05/2018 08:49:00 AM

The headline jobs number was below consensus expectations at 148 thousand, probably somewhat due to weather (snow) during the reference week in December (Weather was the reason I took the "under"). The previous two months were revised down slightly by a combined 9 thousand jobs.

Earlier: December Employment Report: 148,000 Jobs Added, 4.1% Unemployment Rate

In December, the year-over-year change was 2.055 million jobs. This is still generally trending down.

Average Hourly Earnings

Wages CES, Nominal and RealClick on graph for larger image.

This graph is based on “Average Hourly Earnings” from the Current Employment Statistics (CES) (aka "Establishment") monthly employment report. Note: There are also two quarterly sources for earnings data: 1) “Hourly Compensation,” from the BLS’s Productivity and Costs; and 2) the Employment Cost Index which includes wage/salary and benefit compensation.

The graph shows the nominal year-over-year change in "Average Hourly Earnings" for all private employees.  Nominal wage growth was at 2.5% YoY in December.

Wage growth had been trending up, although the acceleration in wage growth slowed in 2017.

Part Time for Economic Reasons

Part Time WorkersFrom the BLS report:

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was essentially unchanged at 4.9 million in December but was down by 639,000 over the year. These individuals, who would have preferred full-time employment, were working part time because their hours had been cut back or because they were unable to find a full-time job.
The number of persons working part time for economic reasons increased slightly in December. The number working part time for economic reasons suggests a little slack still in the labor market.

These workers are included in the alternate measure of labor underutilization (U-6) that increased to 8.1% in December.

Unemployed over 26 Weeks

Unemployed Over 26 WeeksThis graph shows the number of workers unemployed for 27 weeks or more.

According to the BLS, there are 1.52 million workers who have been unemployed for more than 26 weeks and still want a job. This was down from 1.59 million in November

This is the lowest level since April 2008.

This is trending down, but still a little elevated.

The headline jobs number was a little disappointing and the unemployment rate unchanged at a low level - but overall a continuation of multi-year trends.  Wage growth was disappointing again.