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Friday, January 08, 2021

Comments on December Employment Report

by Calculated Risk on 1/08/2021 09:58:00 AM

The headline jobs number in the December employment report was well below expectations, however employment for the previous two months was revised up significantly.


Government employment declined 45 thousand in December. State and local governments lost another 51 thousand jobs. 

Leisure and hospitality lost 498 thousand jobs in December due to the surging pandemic.  In March and April, leisure and hospitality lost 8.3 million jobs, and then gained about 60% of those jobs back.   With the December job losses, leisure and hospitality is down 3.9 million jobs since February 2020.

Earlier: December Employment Report: 140 Thousand Jobs LOST, 6.7% Unemployment Rate

In December, the year-over-year employment change was minus 9.37 million jobs.

Permanent Job Losers

Year-over-year change employmentClick on graph for larger image.

This graph shows permanent job losers as a percent of the pre-recession peak in employment through the November report. (ht Joe Weisenthal at Bloomberg)

This data is only available back to 1994, so there is only data for three recessions.

In December, the number of permanent job losers decreased to 3.370 million from 3.718 million in November.   This is good news.

Prime (25 to 54 Years Old) Participation

Employment Population Ratio, 25 to 54Since the overall participation rate has declined due to cyclical (recession) and demographic (aging population, younger people staying in school) reasons, here is the employment-population ratio for the key working age group: 25 to 54 years old.

The prime working age will be key in the eventual recovery.

The 25 to 54 participation rate increased in December to 81.0% from 80.9% in November, and the 25 to 54 employment population ratio increased to 76.3% from 76.0% in November.

Seasonal Retail Hiring

Typically retail companies start hiring for the holiday season in October, and really increase hiring in November. Here is a graph that shows the historical net retail jobs added for October, November and December by year.

Seasonal Retail HiringThis graph really shows the collapse in retail hiring in 2008. Since then seasonal hiring had increased back close to more normal levels. Note: I expect the long term trend will be down with more and more internet holiday shopping.

Retailers hired 230 thousand workers (NSA) net in December.   Note: this is NSA (Not Seasonally Adjusted).  This was a gain of 121 thousand jobs,  seasonally adjusted, in December.

This might be distorted this year by a combination of seasonal hiring - and some bounce back in employment from the shutdowns earlier this year.   But this an unexpected large gain for retail.

Part Time for Economic Reasons

Part Time WorkersFrom the BLS report:
"The number of persons employed part time for economic reasons, at 6.2 million, decreased by 471,000 over the month. This measure is down from its April high of 10.9 million but is 1.8 million higher than the February level. These individuals, who would have preferred full-time employment, were working part time because their hours had been reduced or they were unable to find full-time jobs."
The number of persons working part time for economic reasons decreased in December to 6.170 million from 6.641 million in November.

These workers are included in the alternate measure of labor underutilization (U-6) that decreased to 11.7% in December. This is down from the record high in April 22.9% for this measure since 1994.

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 3.956 million workers who have been unemployed for more than 26 weeks and still want a job.

This will be a key measure to follow during the recovery.

Summary:

The headline monthly jobs number was well below expectations, however the previous two months were revised up 135,000 combined.  The headline unemployment rate was unchanged at 6.7%.

The good news is permanent job losses declined, and the number of employees working part time for economic reasons also declined.   However, overall, this was another disappointing report.