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Economy in Brief

Shortfall in U.S. Payrolls Offset By Upward Revision
by Tom Moeller January 6, 2006

Non-farm payrolls in December grew just 108,000. Nevertheless, when averaged with a November increase revised up to 305,000 from 215,000 reported initially, the gain was a sharp improvement from the prior two months' average of just 21,000. Consensus expectations had been for a 200,000 increase in December. The average monthly increase in payrolls during 2005 was 179,300 versus 123,000 during 2004.

From the household survey the unemployment rate fell to 4.9%, a bit lower than expected. Employment rose 168,000 (1.9% y/y) after a 14,000 decline in November, revised shallower from the initial report. The labor force fell 30,000 (1.3% y/y).

Factory sector payrolls increased 18,000 (-0.4% y/y). The average gain in factory payrolls during the last three months of 13,000 is the best showing since mid-2004. An improvement in the industry breadth of gain during that period to 54.8% reflected gains in durable manufacturing but not nondurables.

Construction employment fell 9,000 (+3.5% y/y) following an upwardly revised 42,000 increase in November.

Private service producing payrolls rose a modest 82,000 (1.8% y/y) last month though the November increase was revised to 228,000 from 144,000. Retail trade jobs declined for the fourth month in the last five (+0.6% y/y) and job losses were widespread amongst industries. Education & health services jobs increased 25,000 (2.1% y/y) and remained on the earlier pace while professional & business services jobs rose 33,000(2.9% y/y). Jobs in financial services rose 12,000 (2.3% y/y) and leisure & hospitality rose 23,000 (1.9% y/y) and November's increase was revised up sharply.

Average hourly earnings were a bit stronger than expected, rising 0.3%, but the prior month's gain was lessened. Factory sector earnings rose just 0.1% (2.3% y/y) following no change in November.

Higher education and economic growth from the Federal Reserve Bank of Chicago can be found here.

Employment Dec Nov Y/Y 2005 2004 2003
Payroll Employment 108,000 305,000 1.5% 1.6% 1.1% -0.3%
  Manufacturing 18,000 8,000 -0.4% -0.3% -1.2% -4.9%
Average Weekly Hours 33.7 33.8 33.7 (Dec '04) 33.7 33.7 33.7
Average Hourly Earnings 0.3% 0.1% 3.1% 2.8% 2.1% 2.7%
Unemployment Rate 4.9% 5.0% 5.4% (Dec '04) 5.1% 5.5% 6.0%
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