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Crunching the Numbers in the Jobs Report


The headline payroll data were not as good as expected in December, with non-farm jobs declining 85,000. However, the other data in the report suggest payroll growth will start again very soon. I say “again” because revisions to last months’ data show that payrolls increased 4,000 in November, the first gain in two years. Two other positive numbers jumped out of the report. First, finance/insurance jobs increased 10,000, the most in three years. Second, temp employment — traditionally a leading sign of labor demand — increased for the fifth straight month. Meanwhile, the total number of hours worked in the private sector were unchanged in December, remaining 0.6 percent above the bottom in October. Given the economic growth we’ve had since the summer, the jobless rate probably peaked at 10.1 percent in October. Unemployment ticked down to 10.0 percent in November and held there in December. The jobless rate will not decline every month, but is likely to be significantly lower by late next year. In other recent news, the Labor Department reported yesterday that new claims for unemployment insurance ticked up 1,000 to 434,000 last week. The four-week moving average of claims fell to 450,000, the lowest since the collapse of Lehman Brothers in September 2008. Continuing claims for regular state benefits declined 179,000 to 4.80 million.

 — Bob Stein is senior economist with First Trust Advisers.


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