Official unemployment rate hits lowest mark since February 2009 at 8.5%
email@example.com (Meteor Blades)
The Bureau of Labor Statistics reported the private sector generated 212,000 jobs in December and the official unemployment rate fell to 8.5 percent. It was the best job creation showing since April 2011 and the best jobless rate since February 2009. The numbers are seasonally adjusted. The number of officially unemployed is now 13.1 million with 5.6 million of those unemployed for six months or longer. Both the civilian labor force participation rate at 64 percent and the employment-population ratio at 58.5 percent were unchanged over the last month. About 50,000 Americans left the labor force in December.
If job creation were to continue at this level, it would take until July 2014 to return to the number of Americans who were employed in December 2007 when the recession started.
Revisions for payroll employment in October raised the numbers from 100,000 to 112,000 and for November lowered them from 120,000 to 100,000.
An alternative measure of unemployment called U6 includes part-time workers who want full-time work and some but not all of the millions of people who have become too discouraged to look for work. That number fell from 15.6 percent to 15.2 percent.
Here's what the numbers looked like for the most recent five Decembers:
December 2007: + 84,000
December 2008: -619,000
December 2009: -130,000
December 2010: +152,000
December 2011: +200,000
In the past 12 months, the best previous increases reported by the BLS were 210,000 in September, 217,000 in April and 235,000 in February.
Expectations had increased somewhat Thursday when ADP reported 325,000 private sector jobs had been created. Why such a gap between ADP and the BLS? Year-end reporting by ADP may reflect an accounting adjustment that has overstated job gains in the past.
The BLS jobs report is the product of a pair of surveys, one of business establishments and the Current Population Survey of households. The establishment survey determines how many new jobs were added. The CPS provides data that determine the official "headline" unemployment rate, also known as U3. That's the number that fell to 8.5 percent.
[Mesirow Financial chief economist Diane Swonk expects] the December report to be better than those in some of the coming months, as Europe’s debt crisis continues and Washington budget and tax talks come back into focus.
“I’m looking at a slowdown in growth as we move into 2012 from the fourth quarter… we’ve gotten an uneven recovery that’s accelerating. That’s kind of like ‘a glass half full,’” she said. “I think we’re going to have some rocky months ahead. I think we’re going to have a slowdown in growth in the first half of the year with Europe still volatile, wreaking havoc on the stock market. Keeping volatility high just keeps people gun shy from hiring more.”
“If we can get between 100,000 and 200,000 (monthly nonfarm payrolls) for the whole year, that would make me extremely happy,” she said.
One aspect of newly created jobs that don't get much play in the media is wages. And there the news has not been particularly good:
Trying to persuade locked-out workers in Canada to accept a sharp cut in pay, Caterpillar Inc. is citing lower wages elsewhere. But instead of pointing to the usual models of cheap and pliant labor, such as China or Mexico, it is using a more surprising example: the U.S.
Wage and benefit costs at a Caterpillar rail-equipment plant in LaGrange, Ill., are less than half of those at the company's locomotive-assembly plant in London, Ontario, Caterpillar says.
The big equipment maker's stance illustrates how U.S. manufacturing, until recently given up for dead by many Americans, has become more competitive globally. Though the U.S. is hardly a low-wage country, it has become much more efficient, making it more attractive for global manufacturers. U.S. wage growth has been minimal, and manufacturers have found ways to use more-flexible work practices and increased automation to make the same amount of goods with far fewer people.
Among the details in the report today:
• Employment in the retail trade rose 28,000
• Transportation and warehousing rose 50,000
• Leisure and hospitality rose 24,000
• Mining rose 7000
• Professional and business services
• Health care rose 23,000
• Manufacturing rose 23,000
• Government employment fell 12,000
• The average workweek for production and non-supervisory workers rose to 34.4 hours.
• The average hourly earnings for all employees on private nonfarm payrolls rose by 4 cents to $23.24.
To get a better handle on the BLS monthly job report, I urge you to read my post, Some advice on reading the numbers.