{"id":1638,"date":"2020-01-10T18:05:32","date_gmt":"2020-01-10T23:05:32","guid":{"rendered":"https:\/\/naroffeconomics.com\/?p=1638"},"modified":"2020-01-10T18:05:32","modified_gmt":"2020-01-10T23:05:32","slug":"december-employment-report-3","status":"publish","type":"post","link":"https:\/\/naroffeconomics.com\/?p=1638","title":{"rendered":"December Employment Report"},"content":{"rendered":"\n

KEY DATA:<\/strong>  Payrolls: +145,000; Private: +139,000;\nRevisions: -14,000; Retail: +41,000; Manufacturing: -12,000; Unemployment Rate:\n3.5% (Unchanged); Wages: +0.1%<\/p>\n\n\n\n

IN A\nNUTSHELL:<\/strong>  \u201cDespite the ebbs and flows of the job data,\nthe message remains that the labor market is strong.\u201d<\/em><\/strong><\/p>\n\n\n\n

WHAT IT\nMEANS:<\/strong>  After the robust increase in new jobs in\nNovember, it was expected that the December report would be disappointing and\nthat it was.  Hiring faded sharply,<\/em><\/strong>\nthough the average for the last three months of 188,000 is still quite\nsolid.  Actually, given the lack of\nworkers, that was about as good as could be expected.  Still, there were questions raised by the data.<\/em><\/strong>  The over-the-year percentage increase in\njobs continues to fade<\/em><\/strong> and was the second lowest in over eight\nyear.  Just to get to the total payroll\nincrease it took a huge rise in retail hiring.<\/em><\/strong> Three-quarters of that\nincrease was in clothing stores. \nReally?  Gains in professional and\nbusiness services were a lot softer than they had been.  And as expected, manufacturers cut workers.<\/em><\/strong>  With Boeing shutting the 737 Max assembly lines,\nthat weakness is likely to continue as suppliers react.  Wage gains continue to decelerate and that\nis not good news for workers.<\/em><\/strong> \nOver the year, the average hourly wage was up only 2.9%, the lowest\nincrease since July 2018.<\/p>\n\n\n\n

The good news was that the unemployment rate remained at fifty-year lows.\u00a0 But that was largely the only good news.<\/em><\/strong>\u00a0 The labor force rose moderately and the gain over the year was decent but nothing spectacular.\u00a0 The participation rate was flat over the month and up only modestly from December 2018.<\/p>\n\n\n\n

MARKETS AND FED POLICY IMPLICATIONS:Just as the November report was misleading on the upside, the December report was misleading on the downside.\u00a0 Put the two together, though, and you have a better picture of the state of the labor market: It is solid but the lack of supply is constraining hiring.<\/em><\/strong>\u00a0 And that raises an interesting point.\u00a0 Normally, strong growth drives strong hiring.\u00a0 But with the labor shortage, it the softer growth we have seen may be the consequence of lowered payroll gains<\/em><\/strong>.\u00a0 For businesses to continue expanding they will need more workers and they are just not being pulled into the economy at a pace to offset the loss of baby-boomers from the market.\u00a0 About the only good thing for businesses in this report was the further slowing in wage increases.\u00a0 That seems counterintuitive in that the labor shortages should be forcing firms to pay up for employees.<\/em><\/strong>\u00a0 Instead, businesses are attracting workers with non-pecuniary compensation.\u00a0 How long that can continue is unclear in that once you provide those benefits, it becomes harder to add to them.\u00a0 The risk the economy faces is that firms are faced with the inability to meet growing demand because of the lack of workers.\u00a0 They have only so many options, then.\u00a0 They can reject contracts and grow more slowly or start a bidding war for workers so they can fulfill those contracts.\u00a0 Neither would be very good for the economy.\u00a0 <\/em><\/strong>So let\u2019s hope for slow growth and be glad the wackos who told us we would get 3% growth for as far as the eye could see were dead wrong. <\/p>\n","protected":false},"excerpt":{"rendered":"

KEY DATA:  Payrolls: +145,000; Private: +139,000; Revisions: -14,000; Retail: +41,000; Manufacturing: -12,000; Unemployment Rate: 3.5% (Unchanged); Wages: +0.1% IN A NUTSHELL:  \u201cDespite the ebbs and flows of the job data, the message remains that the labor market is strong.\u201d WHAT IT MEANS:  After the robust increase in new jobs in November, it was expected that … Continue reading December Employment Report<\/span> →<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1638","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1638","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1638"}],"version-history":[{"count":1,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1638\/revisions"}],"predecessor-version":[{"id":1639,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1638\/revisions\/1639"}],"wp:attachment":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1638"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1638"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1638"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}