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Employment Situation: Another Solid Report

December 8, 2017

Bottom Line: Bottom Line: Payroll Employment rose by 228k in November, compared with market expectations for an increase of 195k. Negative revisions to October data, mostly revising the tally of teachers on payrolls, were more than offset by positive revisions to September data. On net, the last 3 months have seen broad, solid gains, nearly in-line with the pace of the last 12-months.

The unemployment rate was unchanged, as household employment grew less than the increase in labor force. But over the past year, the unemployment rate has declined by 0.5 percentage points, the result of 1,870k more people finding jobs as 1,073k more people entered the labor force.

Hourly earnings rose moderately after a modest decline in October. While a touch below expectations, the miss was more than offset by strong gains in weekly earnings and the total workweek. Weekly earnings rose 0.48%. The workweek rose and the 3-month average is now 34.4.

Overall the trend rate of job growth had slowed slightly, as would be typical this last in a cycle, but is now stabilizing again around 170k jobs per month. Wage gains are solid around 2% over the last 3-months but 2.5% over the last 12 months.

Payroll Employment rose by 228k in November, compared with market expectations for an increase of 195k. The prior 2 months were revised, lower in October by 17k and higher in September by 20k.

Government jobs ROSE by 7k. Consequently, private sector jobs ROSE by 221k. Overall employment is now 1.4% ABOVE its year ago level, Over the past 12 months, 2,071k jobs have been created.

  • In November, the job gains were in Trade, Transportation & Utilities (+13k with 19k of those in Retail Trade),
  • Professional & Business Services (+46k with the addition of 18.3k in Temp Help Services),
  • Education & Health Services (+41k),
  • Manufacturing (+31k),
  • Construction (+24k),
  • Leisure & Hospitality (+14k),
  • Other Services (+9k), and
  • Financial Activities (+8k).
Jobs were shed in Information (-4k).

The Unemployment Rate was UNCHANGED in November at 4.1%, in-line with market expectations.

Household employment rose by 57k while the labor force increased by 148k, resulting in an increase in the number of unemployed of 90k.

The Labor Force Participation Rate was UNCHANGED at 62.7%. The Employment-Population Ratio FELL by 0.1 percentage points to 60.1%.

The number of people Working Part-Time for Economic Reasons ROSE by 25k to 4,721k. while Long-Term Unemployment FELL by 40k to 1,581k (accounting for 23.9% of the unemployed), while the Mean Duration of Unemployment FELL by 0.6 weeks to 25.4 weeks.

There are now 6.6 million people officially unemployed. In addition, there are another 5,238k people who say they want a job but are not currently looking for one. Finally, another 4,721k people are working part-time because of slack economic conditions.

Hourly Earnings ROSE by 0.2% in November, below market expectations of 0.3%. Hourly earnings are now 2.5% ABOVE their year ago level.

Weekly Earnings also ROSE by 0.5%, the result of the change in hourly earnings and a longer workweek. Weekly earnings are now 3.1% ABOVE their year ago level. The Average Workweek ROSE by 0.1 to 34.5 hours, ABOVE the market consensus at 34.4 hours.

The Index of Aggregate Hours ROSE by 0.5%, combining the moderate gain in private payroll employment and the longer workweek.

Article by Contingent Macro Advisors