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Patrick J. O'Keefe Shares Expectations for December Jobs Report


1/6/14

by Patrick J. O'Keefe, Director of Economic Research

On Friday, January 10, the Bureau of Labor Statistics (BLS) will release data on labor market conditions in the United States during December 2013.

Top Forecast:

  • We expect Friday’s data to show that jobs increased nationally in December, while measures of labor force utilization were mixed.
  • We think BLS will report that nonfarm employment rose by 215,000, with gains of 205,000 jobs in the private sector and 10,000 in the public sector.
  • We anticipate that BLS will report that labor force participation rose, with increases in both the number of jobholders and jobseekers.  It is likely, however, that the unemployment rate temporarily rose as new entrants and previously discouraged jobseekers responded to improving labor market conditions.
     

View a chartbook displaying the most recent labor market indicators.

Background - Employment [Charts 1-28]:  Since the jobs recovery began in March 2010, the U.S. economy has added 7.4 million jobs, more than four-fifths (85.4%) of the 8.7 million jobs lost during the 2008-2009 recession. 

Total nonfarm employment has increased an average of 165,400 jobs per month during the jobs recovery’s 45 months.  Nevertheless, November’s jobs count was 1.3 million (0.9%) below the January 2008 peak. 

Between 1948 and 2007, there were ten jobs recoveries. On average, employment returned to its pre-recession peak on average within 11 months; the longest recovery required 20 months. On its pace through November, this recovery will last 52 months.

November’s jobs growth was solid, but not spectacular. The month-on-month increase of 203,000 was the largest since August, but 17.8% less than a year ago.

The three-month average gain (which smoothes monthly fluctuations) exceeded 193,000 in November. Although lower than October (204,000), it was otherwise the best reading since April’s gain of 224,000.

Year-to-date, total jobs growth surpassed the first 11 months of 2012 by 5.1%. The acceleration reflected faster growth in private employment (2.2% greater than 2012’s comparable period) and slower public sector retrenchment (cutbacks declined 76.1%).

There has been some broadening in the distribution of the recent gains, however. After subpar performance for most of the jobs recovery, goods producers (manufacturing, construction and extraction) accounted for more than one-fifth (22.4%) of November’s private jobs gains. Manufacturers scored their largest increment since March 2012.

Among private service providers, however, employment growth remained concentrated. Three industries (healthcare, transportation/warehousing and retail) contributed more than two-fifths (41.4%) of all private jobs added in November. In the five years prior to the recession, those industries comprised slightly more than one-quarter (28.5%) of all private employment.

As noted earlier, the decline in public sector employment has decelerated. Indeed, over the past three months the public sector jobs count has been stable.

Background - Labor Force [Charts 29-40]: The employment data discussed above are based on a survey of employers; a separate survey of households is the source of data regarding the labor market status of work-age residents. To be counted as a labor force participant, an individual must be a non-institutionalized civilian, 16 years or older, and either a jobholder or jobseeker (i.e., actively looked for work in the prior four weeks). 

The partial Federal shutdown affected October’s data, to some unknown degree. As a result, comparison of data for November and September may provide a somewhat clearer indication of the underlying trends.

Between September and November, labor force participation continued its long-term downward drift. The number of jobholders was little changed (up 0.1%); the number of jobseekers declined (-3.1%). 

Both the number and rate of unemployment were the lowest in five years. The rate dropped because jobseekers quit looking for employment, not because they found it.

Private surveys suggest growing optimism regarding jobs prospects. If this prompts discouraged jobseekers to return to the labor market, the unemployment rate might rise.


The statements, opinions, and conclusions contained herein are based solely upon the author’s own studies, research, and personal experience. Neither CohnReznick nor the author make any representation or warranty as to the accuracy or completeness of this information. CohnReznick and the author expressly disclaim any liability for any loss or damage which may be incurred, of any kind whatsoever, as a result of or arising from the use of any of the information contained herein or reliance on the accuracy or completeness of it.

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