Another Good News/Bad News Report

 | Jan 04, 2013 | 10:45 AM EST
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The number of jobs created in December, 155,000, was very close to consensus expectations. The unemployment rate was unchanged at 7.8%, revised up from 7.7% in an annual revision process to population estimates. The change in total nonfarm payroll employment for October was revised to  up 137,000 from up 138,000, and the change for November was revised to up 161,000 from up 146,000. The best news was in the earnings part of the report.

Specifically, healthcare added 45,000 jobs and food service added 38,000, and bear in mind not all jobs in healthcare are high paying. Construction added 30,000 new jobs while manufacturing added 25,000 workers. Construction appears to have benefited from a post-Sandy rebuilding effort, so it is hard to tease out underlying trends in that sector. Retail, which has added quite a number of new jobs in recent months, shed 11,000 jobs (remember this is seasonally adjusted) in December while all levels of government reduced payrolls by 13,000 people. Other sectors had smaller degree of change.

In December, the average workweek for all employees on private nonfarm payrolls edged up by 0.1 hour to 34.5 hours. The manufacturing workweek edged up by 0.1 hour to 40.7 hours, and factory overtime was unchanged at 3.3 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls edged up by 0.1 hour to 33.8 hours.

Average hourly earnings for all employees on private nonfarm payrolls rose by 7 cents to $23.73, or 0.38%, for the month. Over the year, average hourly earnings have risen by 2.1%, but this belies the very recent trend for increased earnings in the past couple months. Average weekly earnings grew by 0.59%. When you factor in more people working and earning more, the index of aggregate weekly payrolls grew by 0.7% for the second straight month, which will flow into the aggregate measures of consumer incomes. This is good news.

But not all news was good concerning the ability of the longer-term unemployed to find work. In December, the number of long-term unemployed (those jobless for 27 weeks or more) was essentially unchanged at 4.8 million and accounted for 39.1% of the unemployed.

The civilian labor force participation rate held at 63.6% in December. The employment-population ratio, at 58.6%, dropped 0.1 percentage point.  The labor force grew by 192,000 people, while the number of employed persons per the household survey (which has a large margin of error) increased by just 28,000 people.

The household survey showed that there were 164,000 more people unemployed -- due mostly to the increase in reentrants to the labor force -- as those not in the labor force fell by 16,000. This means more people have restarted their job search, keeping the unemployment rate elevated. In fact, of the unemployed, 262,000 of them came from people who reentered the labor force to restart their job search.

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers), at 7.9 million, fell by 220,000 people in December. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job. In December, 2.6 million persons were marginally attached to the labor force, and there were 1.1 million discouraged workers. Both categories were roughly 100,000 higher than both a month and a year ago. (These two categories are not seasonally adjusted.) The broader U-6 unemployment rate using these categories held steady at 14.4%, but is down from 15.2% a year ago.

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