Friday, January 05, 2007

December employment figures -- ho-hum

It's time for the BLS monthly employment report review. Here's the straight dope from Uncle Sam himself:
Nonfarm employment increased by 167,000 in December, and the unemployment rate was unchanged at 4.5 percent, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. Job gains occurred in several service-providing industries, including professional and business services, health care, and food services. Average hourly earnings rose by 8 cents, or 0.5 percent, in December.
If we highlight the private sector data alone, we see a one-month increase of 150,000 jobs, slightly higher than November's 144,000 and the economy's best job producing month since August.

But let's get real for a moment. This job report is just another in a series which shows that 2006 was at best a ho-hum year for employment. For the year as a whole, monthly average (SA) growth was 133,000 jobs. Recall that best estimates suggest 150,000 new jobs per month are necessary simply to keep up with labor force growth -- which translates into about 125,000 private sector jobs per month (that nonesense of 110,000 as "equilibrium growth" coming out of some Fed governors' mouths is just that -- nonsense). That makes 2006 a pretty mediocre year. For comparison, the 2005 average was 152,000 and 2004 was 161,000. See a trend here?

For 2006Q4, actual (NSA) private sector job growth stood at 289,000, down from 386,000 in 2005Q4 and 453,000 in 2004Q4. See the same trend?

But how about those hourly earnings? Up 0.5% in December sounds pretty good, and real hourly wages are on a significant uptick these last three months. We don't have the inflation figures for December yet, and neither do we have the fourth quarter median earnings data at this point, but real wage growth does seem like it's happening again for the first time in three years.

See, the General isn't all gloom and doom now, is he?