Global| Dec 03 2010U.S. Payroll Increase Is Disappointing While Jobless Rate Increases
by:Tom Moeller
|in:Economy in Brief
Summary
Recent labor market improvement backpedaled last month. Nonfarm payrolls rose just 39,000 after an upwardly revised 172,000 October increase. The rise disappointed Consensus forecasts for a 142,000 gain. Also disappointing was the [...]
Recent labor market improvement backpedaled last month. Nonfarm payrolls rose just 39,000 after an upwardly revised 172,000 October increase. The rise disappointed Consensus forecasts for a 142,000 gain. Also disappointing was the rise in the unemployment rate to 9.8%, its highest since April. Accompanying the weak headline figures were discouraging details. The breadth of gain in payrolls fell to just 52% of industries, the lowest of the current expansion. Average hourly earnings were unchanged m/m and the annual gain of 2.1% matched its weakest since 2004.
Within the establishment survey, indications of weaker hiring were broad-based. The weakest was the slight 65,000 worker increase in private service sector hiring. The gain was the smallest since June. It reflected broadly weaker increases across industries as well as monthly declines in finance (-1.2% y/y) and retail trade (+0.4% y/y). Showing the disinterest in hiring full-timers, temporary help jobs rose by 39,500 (19.2% y/y). Continuing to the downside were factory and construction sector payrolls, though the rates of decline have slowed significantly from their worst. In the public sector, payrolls fell 11,000 led by a decline (-1.8% y/y) in local gov't jobs which continue to fall with lower tax revenues. Federal gov't employment rose just 2,000 (0.1% y/y) as the government continues to face large budget deficits.
Accompanying the weak payroll figures was the rise to 9.8% in the unemployment rate, as calculated in the household survey. A 9.6% rate had been expected. The increase reflected a 173,000 drop (+0.4% y/y) in employment following a 330,000 October decline. Moreover, a 103,000 increase (0.2%) in the labor force failed to recoup October's drop. The more comprehensive unemployment rate, which includes marginally attached workers and those who work part time but would prefer a full-time job, remained at 17.0%. Forty-two percent of individuals have been unemployed for 27 weeks or longer, down just slightly from the May high.
The household survey also showed that those unemployed were jobless for a near-record 33.8 weeks, on average. Forty-two percent of individuals had been unemployed for 27 weeks or more. That resulted in a 2.2% rise in the number of individuals not in the labor force, with those "not looking because of discouragement over job prospects" up by nearly one-half y/y.
The figures referenced above are available in Haver's USECON database. Additional detail can be found in the LABOR and in the EMPL databases.
How Do Sudden Large Losses In Wealth Affect Labor Force Participation? from the Federal Reserve Bank of Chicago can be found here http://www.chicagofed.org/digital_assets/publications/chicago_fed_letter/2011/cfljanuary2011_282.pdf
| Employment: 000s | Nov. | Oct. | Sept. | Y/Y | 2009 | 2008 | 2007 |
|---|---|---|---|---|---|---|---|
| Payroll Employment | 39 | 172 | -24 | 0.6% | -4.3% | -0.6% | 1.1% |
| Previous | 151 | -41 | -- | -- | -- | -- | |
| Manufacturing | -13 | -11 | -6 | 0.8% | -11.3% | -3.4% | -2.0% |
| Construction | -5 | 3 | -11 | -2.0% | -15.7% | -6.1% | -0.8% |
| Private Service Producing | 65 | 157 | 122 | 1.1% | -3.4% | -0.2% | 1.7% |
| Government | -11 | 12 | -136 | -1.1% | 0.2% | 1.3% | 1.1% |
| Average Weekly Hours | 34.3 | 34.3 | 34.2 | 33.9 (Nov.'09) |
33.1 | 33.6 | 33.8 |
| Average Hourly Earnings | 0.0% | 0.4% | 0.1% | 2.1% | 3.0% | 3.8% | 4.0% |
| Unemployment Rate (%) | 9.8 | 9.6 | 9.6 | 10.0 (Nov.'09) | 9.3 | 5.8 | 4.6 |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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