U.S. Labor Market Trends

March 4, 2011

The 192K rise of nonfarm payroll employment last month was merely 4K below the consensus forecast but about 30K under whisper numbers engendered by the ADP private job creation estimate released two days ago.  Revisions to December and January figures resulted in 58K more jobs than estimated a month ago, so the level of employment was 54K higher than assumed.  On a more sour note, February’s job level of 130.515 million was 17K lower than the level in December 1999.  If jobs had grown this century at the 1.84% per annum pace seen between end-1979 and end-1999, the current level of employment would instead by 159.984K, 29.5 million higher than the actual present level.  Jobs grew at almost identical rates during the sequential decades of the 1980s and 1990s. 

The monthly increase of U.S. jobs averaged 136K over the last three reported months, up from 78K per month in the prior three months to November and a drop of 100K per month in June-August of 2010.  Over the past six months, jobs advanced by 107K per month, very similar to the average of 105K in the previous six months to August 2010.  Jobs contracted at a monthly pace of 652K in the six months to February 2009, 479K per month in the six months to August 2009, and 119K per month in the six months to February 2010.

After revisions, it now turns out that the jobless rate nudged above 9.9% in just one month, that being a peak of 10.1% in October 2009.  Sixteen months later, such had fallen 1.2 percentage points to 8.9%.  Sixteen months after prior cyclical peaks of 6.3% in June 2003 and 7.8% in June 1992, unemployment had dropped by 0.8 percentage points to 5.5% and 1.0 percentage points to 6.8%.  Sixteen months after the highest post-WW2 jobless rate of 10.8% was hit in December 1982, by comparison, the unemployment rate had declined by 3.1 percentage points to 7.7%.  The length of the workweek has remained stationary at 34.2K for the past three reported months, and on-year growth in average hourly earnings slowed from 2.1% in November to 1.8% in December, 1.9% in January and 1.7% in February. In spite of the favorable declining trend of unemployment and the conspicuous rise in the cost of household staples like food and energy, the jobless rate’s continuing elevated level is still depressing upward pressure on wages.

New jobless insurance claims averaged 388.5K per week between January 29 and February 26.  That was the first sub-400K four-week pace since July 2008.  The 400K level tends to be a line of demarcation separating expanding labor markets from recessionary ones.  In sequential four-week periods, new jobless claims fell from 478.5K per week between August 14 and September 11 to 559K in the four weeks to October 9, 446.5K in the four weeks to November 6, 427.5K in the four weeks to December 4, and 410.75K in the four weeks to January 1.  Bad weather lifted the pace of this proxy for job layoffs to 430.5K in the four weeks to January 29 before the latest spectacular drop to 388.5K.

Following today’s Labor Department report, the dollar edged over $1.4000, ten-year Treasury yields eased, and U.S. stock prices fell in contrast to solid Asian gains earlier in the day.

Copyright Larry Greenberg 2011.  All rights reserved.  No secondary distribution without express permission.

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