Exactly How Strong Was That Jobs Report?
Just a note about this morning’s jobs report. According to the Economic Policy Institute, of the 215,000 jobs that the Labor Department reported being added in the month of November, nearly 77% of them were in services (165,000), of which nearly 40,000 of that was in food services. As to be expected, there was also an increase in construction, arising in part from the post-Katrina reconstruction boom in the South. And there was an expected uptick in retail hiring heading into the holiday season. However, manufacturing went up only 26,000 jobs in the last two months.
Note this also:
Wage growth also accelerated, though it remains below the rates of inflation that have prevailed in recent months. On a yearly basis, hourly wages are up 3.2%, the fastest yearly growth rate since March 2003. The most recent inflation reading, however, shows prices rising at 4.3% (from October 2004 to October 2005).
There are signs in today's report that suggest a weaker job picture than might be readily apparent from the common indicators. For example, average weekly hours were down by one-tenth of an hour (two-tenths for manufacturing), and were negative across most industries. At 33.7 hours per week for private-sector workers in blue-collar or non-managerial jobs, this measure of the strength of labor demand has remained unchanged over the past year, as well as over the recovery that began four years ago. In prior recoveries, average hours were up at this point.
The household survey also has some weak spots, especially regarding African Americans, whose unemployment rate jumped from 9.1% to 10.6%. That 1.5 percentage-point jump is the largest in the history of this series, which goes back to the early 1970s. It is difficult to know what caused this sharp spike. Employment in the notoriously volatile household survey fell in November by 52,000 overall and fell for blacks by 289,000, a result that is in stark disagreement with the more reliable establishment survey. This important indicator involves closer scrutiny in coming months.
Finally, last month represents the four-year mark in the recovery that began in November 2001. While job growth has been consistently positive since June 2003, among all recoveries that have lasted at least this long, the current one has been the worst on record (see the chart below). Over these years, the nation's payrolls have increased by 2.6%, well below the rate of the other recoveries that have lasted this long, including the 1990s recovery, which also began as "jobless."
Now, back to your regularly scheduled Bush cheerleading on the economy…