Payroll employment rises by 252,000 in December; unemployment rate declines to 5.6%

[mahatmakanejeeves]

Last edited Sat Jan 10, 2015, 01:30 PM - Edit history (3)

Source: U.S. Bureau of Labor Statistics

Employment Situation Summary
Transmission of material in this release is embargoed until 8:30 a.m. (EST) Friday, January 9, 2015
USDL-15-0001

Technical information:
Household data: [phone] * [e-mail] * www.bls.gov/cps
Establishment data: [phone] * [e-mail] * www.bls.gov/ces

Media contact: [phone] * [e-mail]

THE EMPLOYMENT SITUATION -- DECEMBER 2014

Total nonfarm payroll employment rose by 252,000 in December, and the unemployment rate declined to 5.6 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in professional and business services, construction, food services and drinking places, health care, and manufacturing.

Household Survey Data

The unemployment rate declined by 0.2 percentage point to 5.6 percent in December, and the number of unemployed persons declined by 383,000 to 8.7 million. Over the year, the unemployment rate and the number of unemployed persons were down by 1.1 percentage points and 1.7 million, respectively. (See table A-1.)
....

The civilian labor force participation rate edged down by 0.2 percentage point to 62.7 percent in December. Since April, the participation rate has remained within a narrow range of 62.7 to 62.9 percent. In December, the employment-population ratio was 59.2 percent for the third consecutive month. However, the employment-population ratio is up by 0.6 percentage point over the year. (See table A-1.)
....

Among the marginally attached, there were 740,000 discouraged workers in December, down by 177,000 from a year earlier. (The data are not seasonally adjusted.) Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. The remaining 1.5 million persons marginally attached to the labor force in December had not searched for work for reasons such as school attendance or family responsibilities. (See table A-16.)

Read more: http://www.bls.gov/news.release/empsit.nr0.htm

---

First observation: the labor force participation rate dropped. Expect this to be a big point of contention in certain circles.

ETA on Saturday: make sure that you read this post:

Job statistics - over the past month, over the past year, and since February 2010

We now resume our regular discussion, already in progress.

December Jobs Report: Everything You Need to Know

8:06 am ET
Jan 9, 2015
Markets



-- Associated Press

Yes, it was that time again, folks. Jobs Friday, when for one ever-so-brief moment the interests of Wall Street, Washington and Main Street are all aligned on one thing: jobs.

The Bureau of Labor Statistics is expected to report that the economy added 240,000 jobs in December, according to economists polled by The Wall Street Journal, a drop from November’s 321,000 but still in line with the recent pace. The unemployment rate is seen falling to 5.7%.

Here at MoneyBeat HQ, we will crunch the numbers, track the markets and compile the commentary before and after the data cross the wires. Feel free to join the conversation in the comments section. And while you’re here, why don’t you sign up to follow us on Twitter.

You forgot to say "Enjoy the show."

Before we do anything else, let's give credit to the workers who run the MoneyBeat blog:

The MoneyBeat Team:

Stephen Grocer
Editor

Phillipa Leighton-Jones
European Editor

Erik Holm
Deputy Editor

Maureen Farrell
Reporter, New York

Paul Vigna
Reporter, New York

Steven Russolillo
Reporter, New York

David Cottle
Reporter, London

== == == ==

Good morning, Freepers and DUers alike. I especially welcome our good friends from across the aisle. You're paying for this information too, so you are a welcome participant in this thread. Please, everyone, put aside your differences long enough to digest the information. After that, you can engage in your usual donnybrook.

If you don't have the time to study the report thoroughly, here is the news in a nutshell:

Commissioner's Statement on The Employment Situation

It is easy to find one paragraph, or one sentence, or one datum in this report that will support the most outlandish of conclusions, from "the sky is falling" to "we'll have blue skies, nothing but blue skies, from now on." Easy, but disingenuous.

Every month, you can find something in the report that will cause you concern. Take the information in context. Consider not just this month’s data, but the trend. Let’s look at some earlier numbers:

ADP® (Automatic Data Processing), for employment in December 2014 (hat tip, IDemo):

ADP Says Companies in U.S. Added 241,000 Workers in December

Bureau of Labor Statistics, for employment in November 2014:

Payroll employment increases by 321,000 in November; unemployment rate unchanged at 5.8%

ADP® (Automatic Data Processing), for employment in November 2014:

ADP National Employment Report Shows 208,000 Jobs Added in November

Bureau of Labor Statistics, for employment in October 2014:

Payroll employment increases by 214,000 in October; unemployment rate edges down to 5.8%

ADP® (Automatic Data Processing), for employment in October 2014:

ADP National Employment Report Shows 230,000 Jobs Added in October

Bureau of Labor Statistics, for employment in September 2014:

Payroll employment increases by 248,000 in September; unemployment rate declines to 5.9%

ADP® (Automatic Data Processing), for employment in September 2014:

ADP National Employment Report Shows 213,000 Jobs Added in September

Bureau of Labor Statistics, for employment in August 2014 (hat tip, Garion 55):

Payroll employment increases in August (+142,000); unemployment rate changes little (6.1%)

ADP® (Automatic Data Processing), for employment in August 2014:

ADP National Employment Report Shows 204,000 Jobs Added in August

== == == ==

Here’s a grim thought:

Fed economists: America’s missing workers are not coming back

Let’s follow that with another grim thought:

Why wage growth disparity tells the story of America's half-formed economic recovery

By Chico Harlan November 21
@chicoharlan
[e-mail]

WILMINGTON, Del. — Thomas Gray says he was fortunate coming out of the recession: He took a job in one of the nation’s fastest-growing industries, food services, preparing meals for 500 students in a Head Start cafeteria.

But after two years of work, his salary had not budged, so his mother came out of retirement and took a job at United Way. Four more years have passed, and Gray is skipping bills to manage his expenses. During that time, his salary has risen 58 cents, to $11.70 per hour. But after taking into account the rising price of goods and services — inflation — he has taken a 6 percent pay cut.
....

With unemployment down to 5.8 percent, the country’s half-formed recovery is often described with a convenient shorthand: We have jobs but little wage growth. But stagnancy is just an average, and for many Americans, the years since the financial crisis have pushed them farther from the line, according to a detailed analysis of government labor statistics by The Washington Post.
....

Among the winners in this climate: Older workers, women and those with finance and technology jobs. ... Among the losers: Part-timers, the young, men, and those in the health, retail and food industries.
....

Chico Harlan covers personal economics as part of The Post's financial team.

Dissenters, take note:

A New Reason to Question the Official Unemployment Rate

David Leonhardt
AUG. 26, 2014

The Labor Department’s monthly jobs report has been the subject of some wacky conspiracy theories. None was wackier than the suggestion from Jack Welch, the former General Electric chief executive, that government statisticians were exaggerating job growth during President Obama’s 2012 re-election campaign. Both Republican and Democratic economists dismissed those charges as silly.

But to call the people who compile the jobs report honest, nonpartisan civil servants is not to say that the jobs report is perfect. The report tries to estimate employment in a big country – and to do so quickly, to give policy makers, business executives and everyone else a sense of how the economy is performing. It’s a tough task.

And it has become tougher, because Americans are less willing to respond to surveys than they used to be.

A new academic paper suggests that the unemployment rate appears to have become less accurate over the last two decades, in part because of this rise in nonresponse. In particular, there seems to have been an increase in the number of people who once would have qualified as officially unemployed and today are considered out of the labor force, neither working nor looking for work.

== == ==

On the road?[link: http://www.dol.gov/_sec/newsletter/2011/20111006.htm|The DOL Newsletter - October 6, 2011]

DOL Data: There's an App for That
Have an iPhone, iPod Touch or Android phone? Now you can access the latest labor data and news from the department's Bureau of Labor Statistics and Employment and Training Administration in the palm of your hand. The latest free mobile app displays real-time updates to the unemployment rate, Unemployment Insurance initial claims, the Consumer Price Index, payroll employment, average hourly earnings, the Producer Price Index, the Employment Cost Index, productivity, the U.S. Import Price Index and the U.S. Export Price Index in real time, as they are published each week, month or quarter. News releases providing context for the data can also be accessed through the app and viewed within a mobile browser or as PDF documents.

US Labor Department launches economic and employment statistics app

Smartphone users gain mobile access to latest labor data and news

WASHINGTON — The most up-to-date employment data and economic news releases from the U.S. Department of Labor's Bureau of Labor Statistics and its Employment and Training Administration now can be viewed using a new mobile application.
....

The new app is currently available for the iPhone and iPod Touch as well as Android phones. The Labor Department is working to develop versions for BlackBerry and iPad devices. Visit http://m.dol.gov/apps / to download this and other mobile apps.

Download the Data, Other Mobile Apps

A few more things:

Meet FRED, every wonk’s secret weapon

FRED stands for Federal Reserve Economic Data. It serves as an online clearinghouse for a wealth of numbers: unemployment rates, prices of goods, GDP and CPI, things common and obscure. Today, FRED is more than a little bit famous, thanks to the public’s fascination with economic data.

Federal Reserve Economic Data

So how many jobs must be created every month to have an effect on the unemployment rate? There's an app for that:

Federal Reserve Bank of Atlanta Jobs Calculator™

Well, enough of that. On with the show.

Monthly Employment Reports

The large print giveth, and the fine print taketh away.

A DU'er pointed out several months ago that, if I'm going to post the link to the press release, I should include the link to all the tables that provide additional ways of examining the data. Specifically, I should post a link to Table A-15. Alternative measures of labor underutilization. Table A-15 includes those who are not considered unemployed, on the grounds that they have become discouraged about the prospects of finding a job and have given up looking. Here are those links.

Employment Situation

Table A-15. Alternative measures of labor underutilization

From the February 10, 2011, DOL Newsletter:

Take Three

Secretary Solis answers three questions about how the Bureau of Labor Statistics calculates unemployment rates.

How does BLS determine the unemployment rate and the number of jobs that were added each month?

BLS uses two different surveys to get these numbers. The household survey, or Current Population Survey (CPS), involves asking people, from about 60,000 households, a series of questions to assess each person in the household's activities including work and searching for work. Their responses give us the unemployment rate. The establishment survey, or Current Employment Statistics (CES), surveys 140,000 employers about how many people they have on their payrolls. These results determine the number of jobs being added or lost.

[BumRushDaShow]

1. Thanks for posting!

Hope that this spring we can see that pendulum really shift to more investment to expand

[mahatmakanejeeves]

3. Thank you for the thanks.

It takes a good half-hour just to cut and paste all this stuff together.

As always, this is the highlight of the month for me at DU. I enjoy doing this so much, and I hope the readers, from all wavelengths of the political spectrum, enjoy it too.

I do not knowingly cherry pick the good stuff and hide the bad stuff. I try to present things on an unbiased basis - "fair and balanced," so to speak.

I'm going to get a cup of coffee. LDS members can take a hot chocolate break now.

Best wishes.

[Lochloosa]

5. Thanks. Your work does not go unnoticed.

[Kingofalldems]

2. Communist Muslin!

[DesertDiamond]

4. LOL!

[joshcryer]

6. Thank you President Obama.

[rtracey]

7. This is sarcasm.....

Beginning of sarcasm..... Hey..... Thank you Mitch McConnell for all you did to help out economy get out of the dumps. I know you worked very hard the past 57 months with the job growth, and how the GOP did everything possible to get this country back from how those liberal-socialists made the greatest president....GWB crash the economy in 2007. Thank you for the wars.....that really helped us out, everyone know that the way to run a country is to keep adding to the deficit, getting our service people in harms way. I for one of millions also support how you will cut these non-essential spending sprees the socialists are trying to keep.... Come on.... Who need medicare and social security, we don't right Mitch....we are the workers, we are the bread winners, not those senior, latino, black, brown, whatever color you choose women who are gay, and disabled. They aren't American, but you are...true blooded AMERICAN.... so keep doing what you do....end of sarcasm....

Keep lying to the American people, keep mounting an assault on the rights of our voters, keep trying to put our country back into the dark ages, keep supplying the hate, keep trying not to have this country prosper....I as a liberal Democrat will NEVER support you and your anti-american group of thugs called the Right Wing

[closeupready]

8. +100,000!

[world wide wally]

9. Fox news will make sure that Republicans get all the credit and half the country will believe it

[Amishman]

10. nope, they will parrot the drop in the participation rate

and ignore everything else

[progree]

11. Job statistics - over the past month, over the past year, and since February 2010

1/10/15 - Great jobs report this month 252,000 net new payroll jobs in December. And October and November were revised upward by a combined 50,000. So we have 302,000 more payroll jobs than we did in last month's report (252+50=302).

The below 2 paragraphs are from http://www.whitehouse.gov/blog/2015/01/09/employment-situation-december :

"Total employment rose by 2.95 million in 2014, the most in any calendar year since 1999. The pace of overall job growth has increased, averaging 246,000 per month in 2014, up from 194,000 per month last year. On a percentage basis, the economy is adding jobs at a rate of about 2 percent per year, also on pace for the largest percentage increase in any calendar year since the late 1990s."

"Crucially, the pickup in the pace of job growth in 2014 has primarily been in industries with higher wages. For instance, the pace of manufacturing job growth has more than doubled to 16,000 per month this year, from 7,000 per month last year, and average weekly earnings for manufacturing workers are about $170 higher than for all private-sector workers"

Over the past year, payroll jobs has increased by 2,952,000. And since the jobs recovery began in March 2010, payroll jobs has increased by 10,692,000.

The numbers in the below paragraphs come from the Household Survey, which is different from the Establishment Survey that produces the payroll jobs number.

The other good news is that the U-6 unemployment rate -- which counts as unemployed every jobless person who has looked for work sometime, anytime, even just once in the past YEAR, plus part-timers who want a full-time job -- dropped 0.2% to 11.2%, the lowest since September 2008, 6 years and 3 months ago. Meanwhile, the unemployment rate fell 0.2 percentage points to 5.6% -- the lowest level since June 2008, 6 years and 6 months ago. (But see below on the labor force participation rate)

Part-Time Workers decreased by 61,000, while full-time workers increased by 427,000, according to Table A-9 figures. Spectacular! But these numbers are very volatile month to month, so that's why its important to look at most of these Household Survey numbers on a longer time basis:

Over the past year, there were 72,000 more part-time workers and 2,694,000 more full-time workers, while the number of part-time workers who wanted full-time jobs decreased by 976,000. All very healthy changes, and contrary to the right-wing meme of most new jobs being part-time.

But over the past month, total Employed increased by a barely modest 111,000 (note how much smaller this number is from the 252,000 net new payroll jobs in the Establishment Survey -- yet another example of how crazily volatile the Household Survey numbers are). This barely modest +111,000 change in the Employed resulted in no change in the Employment-to-Population ratio.

The much-maligned labor force numbers had a bad month: 273,000 FEWER people are in the labor force in December than in November. That resulted in a 0.2 percentage point drop in the labor force participation rate to 62.7%, the lowest level since February 1978, nearly 37 years ago.

Boomer retirements are responsible for about half of the decline we've seen the last few years in that number. A still weak economy and poorly understood demographic shifts account for the other half -- more on that in posting EF-2 below ( http://www.democraticunderground.com/111622439#post2 )

Some key numbers from the Household Survey (note the Household Survey is different from the Establishment Survey that produces the payroll jobs of the first paragraph). See below, and see Table A-1 for the main Household Survey numbers - http://www.bls.gov/news.release/empsit.t01.htm

Exception: the payroll jobs numbers and the inflation-adjusted weekly earnings come from the Establishment Survey. I don't include the over-the-last-month figure for inflation-adjusted weekly earnings, because the CPI data needed for the inflation adjustment is not available until later in the month; but I do include them for the longer periods (over the last year and since the payroll jobs recovery began)

Sadly, the nominal (i.e. not-adjusted-for-inflation) average hourly earnings of all employees on private nonfarm payrolls fell by 5 cents to $24.57 in December, following an increase of 6 cents in November (this is getting a lot of media attention). However, over the past 12 months, this average hourly earnings number has risen by 1.7 percent. From November 2013 to November 2014, the Consumer Price Index for All Urban Consumers (CPI-U) increased by 1.3 percent -- indicating that this earnings number too is trending ahead of inflation for the past 12 months given that December's CPI is likely to be flat or negative (with the massive drop in energy prices).

In the below tables, all "%" ones are percentage point changes, not percent increases or decreases. FOR EXAMPLE, when you see something like this:

-1.7% U-6 unemployment rate

It means that the U-6 unemployment rate dropped by 1.7 percentage points (this EXAMPLE is for the one year from November 2013 to November 2014, when U-6 dropped from 13.1% to 11.4%. This is a drop of 13.1 - 11.4 = 1.7 percentage points, *not* a 1.7% decrease. The corresponding percent change is (11.4-13.1)/13.1 X 100% = -12.98%, i.e. a 12.98% decrease. So in summary, IN THIS EXAMPLE, U-6 dropped by 1.7 percentage points, and also decreased by 12.98%.

Over the last month:
+252,000 Payroll Jobs (Establishment Survey, CES0000000001 )
-273,000 Labor Force (employed + jobless people who have looked for work sometime in the last 4 weeks)
+111,000 Employed
-383,000 Unemployed (jobless people who have looked for work sometime in the last 4 weeks)
+0.0% Employment-To-Population Ratio aka Employment Rate (it's at 59.2%)
-0.2% LFPR (Labor Force Participation rate) (at 62.7%, it is at the lowest level since February 1978, nearly 37 years ago)
-0.2% Unemployment rate (at 5.6%). Is Unemployed (as defined above) / Labor Force [N864.HM]. Lowest since June 2008.
-0.2% U-6 unemployment rate (to 11.2%, lowest since Sep 2008) http://data.bls.gov/timeseries/LNS13327709
-61,000 Part-Time Workers who want Full-Time Jobs (Table A-8's Part-Time For Economic Reasons)
-269,000 Part-Time Workers (Table A-9)
+427,000 Full-Time Workers (Table A-9), very volatile number for some reason, note how it vastly exceeds Payroll Jobs and Employed

Over the last year (last 12 months):
+2,952,000 Payroll Jobs (Establishment Survey, CES0000000001)
+1,082,000 Labor Force
+2,771,000 Employed (yeah!)
-1,688,000 Unemployed
+0.6% Employment-To-Population Ratio aka Employment Rate (woo hoo!)
-0.1% LFPR (Labor Force Participation rate) (ughh)
-1.1% Unemployment rate
-1.9% U-6 unemployment rate (fabulous. it includes anyone that looked for work even once in the past year)
-976,000 Part-Time Workers who want Full-Time Jobs (Table A-8's Part-Time For Economic Reasons)
+72,000 Part-Time Workers (Table A-9)
+2,694,000 Full-Time Workers (Table A-9)
+2.09% INFLATION ADJUSTED Weekly Earnings of Production and Non-Supervisory Workers ( CES0500000031 )
......... the weekly earnings percentage is 11 months thru November because no CPI data for Dec. yet

The reason there's no data for December yet for the weekly earnings is because the CPI inflation adjustment number for December is not yet available. By the way, this and the payroll jobs numbers are the only numbers in the table above that comes from the Establishment Survey rather than the Household Survey.

All the "over the last year" numbers are really good numbers except the 0.1 percentage point drop in the Labor Force Participation Rate. Interesting though that there was a 0.6% percentage point increase in the Employment To Population Ratio. The Population being talked about is the civilian non-institutional population age 16 and over, yes, including all old people, even centenarians.

Seems to me that there is too much discussion in the media of the Labor Force Participation Rate (the employed plus the jobless people who have looked for work in the last 4 weeks, all divided by the population) and not enough attention to what seemingly matters more -- the Employment to Population Ratio. Why aren't we celebrating the increase in the percentage of the population that is employed -- a figure that has been slowly moving up since the job market bottom, despite the growing wave of baby boomer retirements?

Part-Time Workers Who Want Full Time Jobs, as % of All Employed
[div style="display:inline; font-size:1.37em; font-family:monospace; white-space:pre;"]Dec'13 Sep'14 Nov'14 Dec'14
[div style="display:inline; font-size:1.37em; font-family:monospace; white-space:pre;"]5.4% 4.8% 4.7% 4.6%

Since the Payroll Job Recovery Began -- Last 58 months thru Dec 31, 2014: 12'14 - 2'10:
(This is the period from when continuous growth of payroll employment began, thru December 31, 2014)
+10,692,000 Payroll Jobs (Establishment Survey, CES0000000001)
+2,409,000 Labor Force
+8,843,000 Employed (yeah!)
-6,433,000 Unemployed (ditto!)
+0.7% Employment-To-Population Ratio aka Employment Rate (woo hoo!)
-2.2% LFPR (Labor Force Participation rate) (ughh)
-4.2% Unemployment rate
-5.8% U-6 unemployment rate
-2,114,000 Part-Time Workers who want Full-Time Jobs (Table A-8's Part-Time For Economic Reasons)
-122,000 Part-Time Workers (Table A-9)
+9,147,000 Full-Time Workers (Table A-9)
+2.26% INFLATION ADJUSTED Weekly Earnings of Production and Non-Supervisory Workers ( CES0500000031 )
......... the weekly earnings percentage is thru November 2014 because no CPI data for December yet

########################################################################
FFI on the most recent jobs report, straight from the Bureau of Labor Statistics: http://www.bls.gov/news.release/empsit.nr0.htm

Table A-1. Employment status of the civilian population by sex and age (household survey) http://www.bls.gov/news.release/empsit.t01.htm

Several graphs of the key economic stats -- http://www.bls.gov/web/empsit/cps_charts.pdf

The whole enchilada -- including all 16 "A" tables (the household survey) and all 9 "B" tables (the establishment survey) http://www.bls.gov/news.release/pdf/empsit.pdf

BLS Commissioner's Statement on The Employment Situation http://www.bls.gov/news.release/jec.nr0.htm

The Council of Economic Advisors' Take on the Jobs Report http://www.whitehouse.gov/blog/2015/01/09/employment-situation-december (find this at http://www.whitehouse.gov/administration/eop/cea and look for the last "The Employment Situation in" post)

Bureau of Labor Statistics Commissioner's Corner: http://beta.bls.gov/labs/blogs/ Twitter Account: https://twitter.com/BLS_gov

[UncleTomsEvilBrother]

12. This really is great news

It's a shame that more of the economic good news can't stay on the front page of the site.

[mahatmakanejeeves]

13. This is a great post. Hat tip to progree.

The thread is incomplete without it. Thank you so much.

[mahatmakanejeeves]

14. It is easy to find one datum ... in this report that will support the most outlandish of conclusions

Sure enough:

What six years of Barack Obama’s economic incompetence has wrought

By: Vince

Now that Barack Obama’s first six years are over it might be nice to see what he has wrought, and compare him to another iconic president, Ronald Reagan.

When Barack Obama took office in 2009 65.7% of Americans were participating in the laborforce. (This is called the Labor Force Participation Rate – LFPR – which includes those working and those looking for work.) Six years later that number was down to 62.8. When Ronald Reagan took office in 1981 63.9% of Americans were participating in the workforce and six years later that number had grown to 65.6%.

Unemployment is the measure of those in the laborforce looking for work but can’t find it. At first blush Obama seems to be doing well using that measure. In February 2009 unemployment sat at 8.3% and by November 2014 it had dropped to 5.8%. In February 1981 Ronald Reagan took office with an unemployment rate of 7.4%, which by November 1986 had only dropped to 6.9%. Using the unemployment measure seems to suggest Obama’s policies trump those of Reagan.