It’s All About Jobs
The labor market continued to improve in December as employers added 200,000 net new payroll jobs, according to the Bureau of Labor Statistics. Details of the report were encouraging:
· Gains were widespread, led by trade, transportation and utilities, up 90,000, and education and health services, up 29,000. Even the hard-hit construction sector added 17,000. Only the revenue-starved government sector lost jobs, a total of 12,000, which was less than October and November.
· Defying expectations for a slight increase, the unemployment rate sank again to 8.5 percent from November’s upwardly revised rate of 8.7 percent. The number of unemployed declined by 226,000 last month, mostly due to more people finding work but also due to a modest decline in the size of the labor force as discouraged job-seekers dropped out.
· The average workweek for employees on private nonfarm payrolls increased by 0.1 hour to 34.4 hours in December.
· Average hourly earnings for employees on private nonfarm payrolls rose by 4 cents, or 0.2 percent, to $23.24. Over the past 12 months, average hourly earnings have increased by 2.1 percent.
Several other recent reports confirm an upward trend in the labor market:
· The number of Americans filing for their first week of unemployment benefits fell to 372,000 during the week ending December 31, a decline of 15,000 from the prior week. The four-week moving average, which smooths out the volatility in the data, fell to 373,250, its lowest level since June 2008. Levels below 400,000 signify an improving labor market.
· On Wednesday ADP reported that the labor market added a robust 325,000 jobs last month. Small businesses, a sector that has lagged in the recovery, accounted for 148,000 of those jobs. Although the ADP report, which is based on the company’s proprietary client payroll data, often does not mirror the monthly BLS numbers, the two tend to correlate over time.
· The Conference Board index of consumer confidence shows that consumers are becoming slightly more optimistic about the availability of jobs. The share of consumers finding jobs hard to get fell to 41.8 percent in December, down from 43.0 percent in November and the recent high of 49.4 percent in September.
Many analysts are suggesting that the U.S. economy and labor market can continue to improve despite the unfolding recession in Europe as long as the continent’s sovereign debt crisis does not hamstring the financial markets.
Have a great weekend.
SVP, Chief Economist
Grubb & Ellis
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