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Jobs Report: Just What Was Expected



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The headlines for today’s employment report were almost exactly what the consensus expected, showing continued modest improvement in the labor market. The details in the report were better news.  

Overall nonfarm payrolls rose 155,000 in December, in line with an average of 153,000 across 2011 and 2012.  Meanwhile, private payrolls gained 168,000, in addition to higher revisions for October and November. Including those revisions, private-sector payrolls were up 206,000. We should be doing much better, more like the 300,000 jobs per month we saw in the 1990s. What’s holding us back from much faster gains is the huge increase in the size of government, particularly transfer payments, over the past several years.  

Civilian employment, an alternative measure of jobs by household surveys that includes small-business startups and the self-employed, gained only 28,000 in December but was up 192,000 per month across all of 2012, faster than the payroll numbers, indicating an acceleration in payroll growth in 2013. The unemployment rate ticked up slightly in December but remained a rounded 7.8 percent, as the labor force grew by 192,000. In the past year, the labor force is up 1.4 million while the jobless rate is down 0.7 percentage points.  

The best news in today’s report was on hours and wages: Total hours worked were up 0.4 percent in December and 2 percent from a year ago. Average hourly earnings were up 0.3 percent in December and 2.1 percent from a year ago. As a result, total cash earnings (based on earnings and hours) are up 4.1 percent from a year ago (and about 2.3 percent when adjusted for inflation), so consumers have room to increase spending.  



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