Big miss on the topline number for the November jobs report but wages continue to rise and the unemployment rate fell, according to the latest data from the Bureau of Labor Statistics…(BLS)
- Total nonfarm payroll employment rose by 210,000 in November, economists had projected 550,000
- The unemployment rate fell 40 basis points to 4.2%. Economists had predicted a smaller drop to 4.5%.
NOTE: There are still 3.9 million jobs missing from the pre-pandemic economy.
Prime-age labor participation continued to move upward hitting 78.8% in November. While this down 1.7 percentage points from the all-time in February 2020, it is up significantly from the 76.4% reported in January.
- For reference, Matt Darling noted on Twitter that “The average prime age employment/population ratio is the twenty-first century is 78.1%.”
Professional and business services had the best month with the creation of 90,000 jobs in November. Transportation & warehousing created 50,000 jobs followed by administration & waster services (+42,000) and construction and manufacturing who each created 31,000 jobs.
- NOTE: Leisure & hospitality was relatively unchanged with 2,000 jobs created and retail saw the biggest decline with 20,000 jobs lost in November.
Wages continue to grow but not as much as expected and is struggling to keep pace with inflation…
- AVERAGE HOURLY earnings were up 0.3% month-over-month and up 4.8% year-over-year to $31.03 in November.
- SWING & A MISS: Like the topline number, wages missed expectations as economists had predicted 0.5% m-o-m growth and 5% y-o-y growth.
PROBLEM: Wage growth of 4.8% is great for workers but unfortunately latest PCE data shows inflation running at 5.0% which means American workers are now losing purchasing power
One of the big points of confusion was between the household and payroll reports. Chris Anstey, senior editor at Bloomberg, noted:
- “Remember as always there are two surveys, of employers and households:- Payrolls — weak today — come from employers.- Households, the basis for the drop in the unemployment rate, show a strong set of data. There’s an over-1 million increase in the number of people employed .A major divergence between the two.”
Two important predictions:
CORRECTION IS COMING: Steve Liesman & Tony Fratto both are two of many who think the topline number is wrong and are projecting a big correction next month.
SHOW GOES ON: Neil Irwin doesn’t think a disappointing topline number is going to stop the Fed, “Given the evidence of labor market tightness here, I have to think the Fed’s accelerated taper is a go despite the soft payrolls growth.”