Employment Situation: Solid Job Gains, Unemployment Unchanged

Bottom Line: Payroll employment rose by 292k in December, compared with market expectations for an increase of 200k. There were moderate revisions to the previous two months which added a total of 50k jobs. Job creation has averaged 221k over the past 12 months modestly below the past 18 months average of 241k. However, the net of this month’s solid number and the previous two upward revisions leaves the recent trend job creation rate much higher at 250k-285k as the 3 month average is 284k. The unemployment rate was unchanged in December as household employment grew just slightly more than the increase in labor force. Over the past year, the unemployment rate has declined by 0.6 percentage point, the result of 2,490k more people finding jobs as 1,691k more people entered the labor force. Both hourly and weekly earnings were unchanged in December. The workweek was also unchanged for the 2nd consecutive month. Payroll Employment ROSE by 292k in December, compared with market expectations for an increase of 200k. The prior 2 months were revised, higher in November by 41k and higher in October by 9k. Government jobs ROSE by 17k. Consequently, private sector jobs ROSE by 275k. Overall employment is now 1.9% ABOVE its year ago level. Over the past 12 months, 2,650k jobs have been created. In December, the job gains were in Trade, Transportation & Utilities (+31k with 4k of those in Retail Trade), Professional & Business Services (+73k with the addition of 34k in Temp Help Services), Education & Health Services (+59k), Construction (+45k), Leisure & Hospitality (+29k), Government (+17k), Information (+16k), Financial Activities (+11k), Financial Activities (+11k) and Manufacturing (+8k). The Unemployment Rate was UNCHANGED at 5.0%, in line with market expectations. Household employment rose by 485k while the labor force increased by 466k, resulting in a decrease in the number of unemployed of 20k. The Labor Force Participation Rate ROSE by 0.1 percentage points to 62.6%. The Employment-Population Ratio ROSE by 0.1 percentage points to 59.5%. The number of people Working Part-Time for Economic Reasons FELL by 60k to 5,910k while Long-Term Unemployment ROSE by 31k to 2,085k (accounting for 26.4% of the unemployed), while the Mean Duration of Unemployment FELL by 0.3 weeks to 27.6 weeks. There are now 7.9 million people officially unemployed. In addition, there are another 5,886k people who say they want a job but are not currently looking for one. Finally, another 5,910k people are working part-time because of slack economic conditions. On a trend basis the labor market is improving and gains are turning moderate. Hourly Earnings were UNCHANGED, below market expectations of 0.2%. Hourly earnings are now 1.7% ABOVE their year ago level. Weekly Earnings were also UNCHANGED, the result of no change in hourly earnings and a steady workweek. Weekly earnings are now 2.2% ABOVE their year ago level. The Average Workweek was also UNCHANGED at 34.5 hours, in line with market consensus. The index of hours worked rose by 0.3% and the Q4 average grew slower than in Q3. This reflects the generally moderate pace of job creation and the shorter workweek (for the quarter) would be consistent with a modest GDP report for Q4.