The headline jobs number is much weaker than appears at first glance. Full time employment declined by over 1.5 million. Revisions hugely negative.
From September 2020 through early 2022, nonfarm payroll job gains and full time employment changes tracked together.
Starting around March of 2022, a divergence between employment and jobs became very noticeable.
Payrolls vs Employment Gains Since March 2023
- Nonfarm Payrolls: 1,760,000
- Employment Level: +359,000
- Full Time Employment: -1,091,000
From the full time employment peak in June of 2023, full time employment is down by 1,591,000. In the same time frame, jobs are up by 1,157,000.
Job Report Details
- Nonfarm Payroll: +216,000 to 157,232,000 – Establishment Survey
- Civilian Non-institutional Population: +169,000 to 267,991,000
- Civilian Labor Force: -676,000 to 167,451,000 – Household Survey
- Participation Rate: -0.3 to 62.5% – Household Survey
- Employment: -683000 to 161,183,000– Household Survey
- Unemployment: +6,000 to 6,268,000- Household Survey
- Baseline Unemployment Rate: +0.0 to 3.7% – Household Survey
- Not in Labor Force: +845,000 to 100,540,000 – Household Survey
- U-6 unemployment: +0.1 to 7.1% – Household Survey
Change in Nonfarm Payrolls
Monthly Revisions
- The change in total nonfarm payroll employment for October was revised down by 45,000, from +150,000 to +105,000
- The change for November was revised down by 26,000, from +199,000 to +173,000.
- With these revisions, employment in October and November combined is 71,000 lower than previously reported.
The string of negative revisions to the jobs report continues.
Part-Time Jobs
- Involuntary Part-Time Work: +217,000 to 4,211,000
- Voluntary Part-Time Work: +579,000 to 22,458,000
- Total Full-Time Work: -1,531,000 to 133,196,000
- Total Part-Time Work: +762,000 to 27,794,000
The above numbers never total correctly due to the way the BLS makes seasonal adjustments. I list them as reported.
Hours and Wages
This data is frequently revised.
- Average weekly hours of all private employees fell 0.1 hour to 34.3 hours.
- Average weekly hours of all private service-providing employees was flat at 33.3 hours.
- Average weekly hours of manufacturers was down at 0.1 hour (with a negative revision taking away another 0.1 hour) to 39.8 hours. I have not seen manufacturing hours under 40 for ages.
An overall decline or rise of a tenth of an hour does not sound line much, but with employment over 160 million, it’s more significant than it appears at first glance.
Hourly Earnings
This data is also frequently revised. Here are the numbers as reported this month.
Average Hourly Earnings of All Nonfarm Workers rose $0.15 to $34.27. A year ago the average wage was $32.92. That’s a gain of 3.94%.
Average hourly earnings of Production and Nonsupervisory Workers rose $0.10 to $29.42. A year ago the average wage was $28.21. That’s a gain of 4.3%.
Year-over-year wages are keeping up with inflation after underperforming for many months.
Unemployment Rate
The unemployment rate hit a 50-year low in January and April of 3.4 percent. It hit 3.8 percent in August, September, and October, the highest since January of 2022, but is now back to 3.7 percent.
Alternative Measures of Unemployment
Table A-15 is where one can find a better approximation of what the unemployment rate really is.
The official unemployment rate is 3.7%.
U-6 is much higher at 7.1%. Both numbers would be way higher still, were it not for millions dropping out of the labor force over the past few years.
Some of those dropping out of the labor force retired because they wanted to retire. Some dropped out over Covid fears and never returned. Still others took advantage of a strong stock market and retired early.
The rest is disability fraud, forced retirement (need for Social Security income), and discouraged workers.
Birth Death Model
Starting January 2014, I dropped the Birth/Death Model charts from this report.
The birth-death model pertains to the birth and death of corporations not individuals except by implication.
For those who follow the numbers, I retain this caution: Do not subtract the reported Birth-Death number from the reported headline number. That approach is statistically invalid.
The model is wrong at economic turning points and is also heavily revised and thus essentially useless.
Birth-Death Methodology Explained
Every month this subject comes up. I gave a detailed explanation of the model and why the hype is wrong in my December 8, 2023 post How Much Did the Huge 412,000 Birth-Death Adjustment Impact October’s Job Report?
The month does not matter. If you think the model has a big impact, please click on the above link for why it doesn’t.
Household Survey vs. Payroll Survey
- The payroll survey (sometimes called the establishment survey) is the headline jobs number. It is based on employer reporting.
- The household survey is a phone survey conducted by the BLS. It measures employment, unemployment and other factors.
If you work one hour, you are employed. If you don’t have a job and fail to look for one, you are not considered unemployed, rather, you drop out of the labor force.
Looking for job openings on Jooble or Monster or in the want ads does not count as “looking for a job”. You need an actual interview or send out a resume.
These distortions artificially lower the unemployment rate, artificially boost full-time employment, and artificially increase the payroll jobs report every month.
Expect a Long But Shallow Recession With Minimal Rise in Unemployment
Given hiring pressures and boomer retirements, I commented on July of 2022 Expect a Long But Shallow Recession With Minimal Unemployment Rise
That has been an accurate assessment to date although we likely skirted a recession.
Unlike many others, I still do not expect the unemployment rate will rise much in the next recession compared to the average recession impact.
Labor Market Back to Normal
A month ago, I commented A Big Decline in Quits Suggests the Labor Market is Back to Normal
OK, so we are back to “normal” but where are we headed?
Demographics are strongly favorable for job strength. Employment is another matter as the wave of boomer retirements continues.
Final Thoughts
This report is much worse than headline numbers indicates.
Impact of the end of the UAW strike gave an artificial boost to employment last month. This month the BLS took that away and then some.
A decline in full time employment of 1.5 million is remarkable. This series is heavily revised so let’s see what January brings.
The continued dependence on government jobs, up another 52,000 in December, also masks weakness.
This is not a Nirvana setup. The Fed is walking a tightrope. The only questions are when and how the Fed makes another policy error and in which direction.
Expect a mistake. The Fed has a long history of them.
I was forced to exit the labor force because, my employer wanted to get rid of older males working for the university.
No, you were forced to leave a job. If you then decided not to look for another one, you left the labor force.
Other than this election year, the media reports the November and December seasonality as a factor in the rise of part time employment. Substantial wage increases due to inflation has motivated many experienced workers to retire early. Union and government employees whose pension benefits are influenced by their highest salary. Considering the increase in employment, there has been a shortage in the supply chain, from the decrease of experienced labor.
216K is decent number. It certainly DOES NOT suggest the labor market is softening just yet. What will matter is the numbers over the next few months. Job creation in Jan & Feb is usually not all that great. These are months that some companies have net job losses. March is when things usually start to turn around. Q1 will definitely give us an idea of what to expect throughout 2024.
The number of layoffs and businesses closing just today is really high. link to dailyjobcuts.com
Top of page is link to headline stories. Middle of the page – left hand side is the companies laying off. Middle of the page – right hand side are the companies that are closing and bankruptcies. This is a great website for info.
How do we know that it is “really high?” It is an interesting site, but I don’t see any longer-term context or perspective there, so it is hard to interpret past the lists. Also, the site looks to be politically slanted. They are not making it up, but the selection looks one-sided.
The links from the articles are left and right. The link takes you to where the article was posted. This could be from a company announcement or news source. The articles frequently change. If you scroll down to look at previous days/months layoffs the #’s have been significantly increasing. We’re not hearing about this from the MSM.
And yet, the unemployment rate over the last six months has only risen slightly. As of yet, there’s not real trend saying we’re moving towards the doorstep of a recession. And some of the rise in unemployment is from workers trying to re-enter the job market which causes the unemployment rate to rise.
Yes, when the economy strengthens, discouraged workers reenter the job market. Particiation rises, and the UE rate rises with it. The other possible issue this year is that the last of the covid subsidies to hospitals and governments are expiring and forcing people out of subsidized jobs into the unsubsidized private sector.
The latter phenomenon is only a possibility, not a confirmed fact, and will be hard to document at least for a while. I think it’s something to watch this year.
They have links, but no aggregations over time.
Full time : 133.2 M. Part time : 27.8M. Total : 161.0M, out of how many, including 10M new immigrants. The average hourly wages : +4% Y/Y. Unemployment : 3.7%. Why so much rage in the streets, against the gov, against the Fed, the media, Harvard,
MIT, foreign states…The era of unexplained and uncontrolled rage might get worse in 2024/25.
On the economic front, because inflation has really eaten into the basics and the wages have not kept up with out of pocket expenses.
Thank you. I was wondering that particular number.
Many more gumment workers needed to supervise the dole. Right.
All these jobs data series have been revised so often it is laughable. You have a job and that is great but one job does not equal another. Income is a better scale than jobs numbers. PMI is a better forward indicator. Jobs start to go when you are already in a recession and the recession does not get recognized officially until after the election. Government spending is the only thing keeping us afloat with jobs and money. The piper will be paid and the longer you wait the bigger the bill.
Employment and other economic data are commonly revised. There is nothing unusual about that.
Wow, no recession in sight and everyone working yet 2 trillion a year of new debt, party on.
U-6 is always higher than U-3. And no, unemployment would not be much higher but for labor force dropouts. Dropouts not caused by retirement or disability are captured in U-5’s (which is incorporated in U-6) measurement of discouraged workers. Please don’t get defensive, but read on.
Your information is interesting, Mish, and I VERY MUCH appreciate your statistical reports and analyses. In fact, it’s why I read your stuff. That said, I suggest looking deeper. In this case, have a look at the BLS data on labor force participation in the 25 to 54 year old cohort, the prime working age population. I think it might be the best way to look at participation, or at least serve as a good check on any analysis of it.
link to fred.stlouisfed.org
Two things stand out. One is that participation rose when women entered the workforce. The other one is that participation declined significantly after the Panic of 2008 and of course during the height of the pandemic. The decline after ’08 is discouraged workers talking. Since the pandemic ended, participation has been increasing. What your post mentions looks very much like a blip and not significant.
But that is far from the end of it. Elsewhere, I have asked you for more detail about the waning of government covid spending and its impact on unemployment rates. My hypothesis (a highfalutin term for guess) is that people who banked their stimulus checks have been reentering the workforce. The numbers seem to show it.
You have noted VERY interestingly that a lot of recent gains in employment have been from government, which has prompted me to think about what will happen to unemployment in 2024 as lingering government covid stimulus (hospital subsidies being a biggie) peters out and more people seek private employment.
Along those lines, I wonder about two private sectors. A big one is restaurants, which have seen skyrocketing menu prices at every level. Personal example: Three months ago, on a vacation through Eastern Oregon, I paid $15 at a McDonalds for two cheeseburgers, two small fries, and two drinks. Sticker shock! Wow! In Boston, one of my brothers aid $10 for two medium ice cream cones with jimmies at a Dairy Queen in the Boston suburbs. We both could afford to be hosed, but what about others? How sustainable will this be?
This phenomenon of skyrocketing restaurant prices has received NO attention from the major media, whose disconnected “reporters” and editors are rich and dine on expense accounts. Everywhere else, we are seeing casual and fast food chains closing outlets — did you see the recent closings announced by TGI Friday’s? — and I wonder about the impact on employment in that sector this year.
Another factor, and surely smaller, is the home improvement retailers like Home Depot and Lowe’s, and furniture stores. You have noted the weakness in existing home sales from higher interest rates. There is a longstanding relationship between those stores and home sales, because the first thing that a homeowner does after moving is going out for new appliances and furniture, and renovation supplies.
I don’t have a handle on the time lags involved, so I am only guessing that there might be trouble in that sector this year.
Okay, this is a long comment, probably too long. My point is that I think you are barking up the wrong tree by focusing on U-6 and aggregate participation, at least for now. If the s*** hits the fan in the ways I have just guessed, that could change this year. But it has not changed just yet. Mish, you are a talented and diligent thinker, and I HIGHLY salute you for that I say all this as a way of hopefully inspiring you to look deeper, in ways and places usually not examined.
All the best to you, and happy New Year.
Restaurant prices have been skyrocketing because people have been willing to pay those prices. Dairy queen charged $10 for 2 ice cream cones? I paid around $7.00 at jp licks for one scoop on a regular ice cream cone about a year ago
A fair amount of restaurant traffic is quite casual. An ice cream cone is a great example, being a classic impulse purchase. You can obviously not think twice about a $7 cone, but I wonder how many other people will be popping in for those as often.
The issue isn’t confined to the low end, either. Reports out of San Francisco are that the higher end places are talking in crisis terms.
I am not drawing conclusions here, but my antennae are up and waving in the wind. Restaurants employ a whole lot of people. There are anecdotal signs that traffic is being hurt. How much it’s being hurt, and how much it will be hurt, is the question. Related to that is hybrid office attendance. People who go to the office three days a week won’t be going out to lunch as often.
I think that sector will be worth watching this year. We shall see.
“forced retirement (need for Social Security income),”
I’ve been wondering about that. Since you can take SS while still employed how would that be forced retirement? Or is it an artifact of the dataset? Does it automatically assume that if you are collecting SS you are not working?
I find ignoring all unemployed illegal aliens already here and entering daily in the thousands makes me feel a lot better about the jobs report. I did the same thing with masks, vaccines and the strong arming with EVs. It really works. I honestly forgot about unemployed illegal aliens until I read the jobs report even though it wasn’t even in the report.
An invasion army of 10 million unskilled, unemployed.
“An invasion army of 10 million unskilled, unemployed.”
And all with the proclivity to have a bunch of kids. This cheap labor that some commentors tout is going to wind up costing taxpayers a freakin’ fortune in freebies and handouts.
Silly question, things change frequency these days, isn’t the baby that is born, considered a citizen? If so, then isn’t the immediate family of said baby momma, all allowed entry and viability to become citizens as well? Asking for a friend…
What are they in fact skilled in? That’s the real, and truly unanswered question right now…
I noticed vax injured missing from this list.
“U-6 is much higher at 7.1%. Both numbers would be way higher still, were it not for millions dropping out of the labor force over the past few years.
Some of those dropping out of the labor force retired because they wanted to retire. Some dropped out over Covid fears and never returned. Still others took advantage of a strong stock market and retired early.
The rest is disability fraud, forced retirement (need for Social Security income), and discouraged workers”
The “vax injured” are captured in the participation rate, which has been rising since the end of the pandemic.
Many of the vax injured are still working if they can’t get disability and free health care. I’m looking for a way to chart how the EXCESS deaths from the vaccines are going to affect our long term economy. (housing/households, health care, dying early and not collecting SS, etc.)
You might start by documenting how many “excess deaths from the vaccines” there were along with the definition of said excess deaths. Your guesses and fears don’t count as documentation or definitions.
Dying early will slow the rising cost of healthcare, and payouts for social security by boomers for sure.
A lot of money wrapped up in those boomer blankets. We have been seeing that being spent by the percipients of said monies.
That has helped to fuel college attendance, vehicle purchases, rental properties, condo sales, vacations, Etc. The money dump is far from over too, but a lot has showered down to be sure.
What else is certain is the simple fact: “What Can No Longer Go On; Won’t” and that well has run dry, and what’s left has been quickly and quietly redirected. Some will continue to fall, because there is still so much, but paying off/down debt, slowing spending, and stopping borrowing are now at the top of most list, or should be…
The “excess deaths” are primarily in the 25-44 age bracket. The cost of healthcare for the majority of these people are high unless they died a short term after the vax (i.e. 1 week) . They are having major health issues (i.e. heart, neurological, etc.) The cost of this care is expensive. Health care for healthy 25-44 year olds isn’t usually really high. The excess deaths are not from the boomers.
I don’t believe you. I think you are making it up, and that you have no confirmed data.
Once again, the increase in government payrolls is about 25% if total job gains.