Employment Hits The Skids Again

Well, my post last night about Obama’s plans to address the economy this afternoon being a good precursor to a positive jobs report was certainly spot on — NOT!

Ah, the perils of prediction. Take your lumps and move on. In that vein here is the less than cheery statement from the BLS:

Nonfarm payroll employment edged down (-85,000) in December, and the unemployment rate was unchanged at 10.0 percent, the U.S. Bureau of Labor Statistics reported today. Employment fell in construction, manufacturing, and wholesale trade, while temporary help services and health care added jobs.

Jake at EconomPicData.com as usual sums it up nicely with his graphs and short commentary:

employment jake december

civilian labor force december jake

That makes more than 1.6 million workers that have dropped out since August of this year.

Amid all of this, it’s important to keep in mind that the labor markets appear to be at least not getting any worse. Mass layoffs appear to be behind us but what we have to look forward to, so far, does not warm one’s soul. The numbers are a dry portrait of a nation and its people suffering deeply. We will see rather soon, I suspect, the implications of that pain.

Just to round out the information pack, here are economists’ views as compiled by the WSJ Real Time Economics Blog:

  • That we took a step back in employment in December should not be a shock as this tends to happen. Despite the negative reading in December, we are almost assuredly at the very end of the current cycle of firing and we repeat our belief that the number of people that lose their job from here on out is irrelevant. With over 8 million jobs shed in this recession, another 85,000 or 25,000 has no bearing. The only thing that matters is how quickly these people find a new job. –Dan Greenhaus, Miller Tabak
  • The 85,000 decline in non-farm payrolls in December, which follows a revised 4,000 increase the month before (previously an 11,000 fall), is not a sign that the economic recovery has already stalled. November’s gain undoubtedly over-stated the strength of the labour market, while December’s decline probably under-states it. Monthly changes in payrolls are notoriously volatile and the underlying trend of improvement, which began in the first half of last year, still appears intact. –Paul Ashworth, Capital Economics
  • The fact that positive job creation occurred in November 2009 is a very important fact, one that should not be ignored despite the disappointing headline print in December. While the worst of the recession is likely over, the fact that the duration of unemployment remains rigid is a concern, though a silver lining is that we are likely to see net job creation assisted by census hiring in the first quarter of 2010. –Ian Pollick, TD Securities
  • There was some important weather-related downside in the December labor market report. This factor, together with the recent sharp improvement in jobless claims, a pullback in layoff announcements and a couple of other technical factors, all point to a much stronger employment report next month. –David Greenlaw, Morgan Stanley
  • The labor market is not out of the woods yet. The December report was generally weak… The unemployment rate would have been higher if it weren’t for the fact that 661,000 people dropped out of the labor force. The underemployment rate rose again to 17.3% from 17.2% in November. The long-term unemployed, those out of work for 27 weeks or longer, continued to rise. In December, 4 out of 10 unemployed were long-term. Despite the disappointing report, the labor market is in the process of stabilizing. –Sung Won Sohn, Smith School of Business and Economics
  • Perhaps more concerning than the weak nonfarm payrolls figures were results from the household survey. Household employment (an alternative measure of employment derived from surveys of households rather than firms) fell by 589k. We had expected a decline in this series after a large gain in November, but the drop was far in excess of our expectations. On a six-month moving average basis, the rate of decline in the household employment series has shown little improvement since July. –Zach Pandl, Nomura Global Economics
  • The lack of hiring might reflect greater caution on the part of small companies or an outright inability to respond to rising sales because of financing constraints. The number of persons unemployed for 27 weeks or longer increased by 229,000 in December to 6.1 million, or 4% of the labor force. Both the average and median duration of unemployment rose in December. The good news is that labor markets are always weakest at cyclical upturns and that the foundation for job creation and business spending gains is in place. – Aaron Smith and Ryan Sweet, Moody’s Economy.com
  • Despite the disappointment over the headline payroll decline, the improvement in the three-month trend is not violated by this report and, given the further decline in initial jobless claims since the December payroll survey week, we still believe we are on the verge of the emergence of modest payroll growth. –RDQ Economics
  • November payrolls looked too good to be true relative to ADP and other indicators so this is a correction; the underlying trend undoubtedly continues to improve and payrolls will be positive by February, not least because Census hiring will start to rise. But the core is improving too; manuf just -27,000 in December and trending towards stability; services down just 4,000 after a 62,000 gain in November; temp hiring soaring, up by 47,000 in December. Unemployment will be slow to fall though because people will come back into the labor force, and wages will keep slowing. –Ian Shepherdson, High Frequency Economics
  • Overall the December employment report was a disappointment and potentially highlights the difficulties making the transition from the end of firing to actual hiring. –Julia Coronado, BNP Paribas
  • The jobs situation had been improving since summer on the back of reduced layoffs but in December the run to recovery slammed into the hard reality that no one is hiring… Although the pace of layoffs is far less than it was in the spring, the lack of hiring means that those out of work continue to stay that way for a long time. The average duration of unemployment extended out in December to 28.5 weeks compared with 26.9 weeks in November. Among those unemployed a post-war record 38.3% have been looking for work 27 weeks or longer. When the employment data are stacked up with consumer activity and the like the total picture is of an economy that has stopped falling but has yet to start improving in earnest. –Steven Blitz, Majestic Research

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