Dec Payroll

Today’s key BLS Dec Payroll report did not fit the pattern we had predicted earlier; that is, vigor did not roll through establishment forecasts. We particularly expected more from the private sector.

Private sector jobs rose only 113M while gov’t jobs fell by 10M. There were however small upward revisions (70M) to the prior 2 months headline numbers. This is the 6th straight month of year-on-year increases following 26 straight months of year-on-year declines.

The av workweek remained at 34.3 hours, the highest level since Nov/08, but hourly earnings rose a meager 0.1%, and weekly earnings rose 0.1% due to the flat workweek.

The unemployment rate plunged to 9.4% from 9.8%. Today’s decline was due to a sharp decline in the labor force (-260M) combined with a large increase in household employment (+297MK), leading to a plunge in the number of unemployed (-556M).

Bottom line: As a result of today’s numbers forecasters will now look for less spending activity ahead, many shaving their forecasts as we write. Instead, we expect spending activity, especially discretionary activity to broach these forecasts for Q1 and H1. Returning to our much earlier comment, this vigor is tied to something most forecasting models have missed - that spark provided through the voting booth and quick action on consumer relief by the new Congress.


Robert Craven