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News : US Economy Last Updated: Jan 13, 2014 - 7:40 AM


US added only 74,000 jobs in December; Jobless rate fell to 6.7% as workforce fell
By Michael Hennigan, Finfacts founder and editor
Jan 10, 2014 - 3:44 PM

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The unemployment rate declined from 7.0 to 6.7% in December as people left the workforce, and nonfarm payroll employment edged up (+74,000). Monthly job gains averaged 182,000 in 2013, about the same as in 2012. In December, employment rose in retail trade and wholesale trade but fell in the information industry.

The share of Americans who are either working or looking for work fell to 62.8%, near 35-year lows.

Incorporating the revisions for October and November, which increased employment by 38,000 on net, monthly job gains have averaged 172,000 over the past 3 months.

Paul Edelstein, IHS Global Insight director of Financial Economics said: "It is difficult to determine how much of this report is 'signal' and how much is 'noise.' If the normal number of workers were unable to work due to weather, the jobs count could have been closer to 200,000. Yet this doesn’t fully explain the loss of 347,000 workers from the labour force"

Andrew Wilkinson, Interactive Brokers Chief Market analyst said: "Before sounding the warning bells over an economy falling off the cliff at year end, look at the chart of retail employment. Some 55,000 of the net 74,000 came from retail – a sign that retailers are finally accepting that they need bodies on the shop floor and in warehouses and perhaps that they are warming to future prospects."

Goldman Sachs' economics chief Jan Hatzius said: "The December employment report was broadly weaker than expected, although some of the disappointment was likely due to bad weather," said.

"[F]rom the household survey, the number of individuals who reported not being at work due to bad weather was 273,000, above the December average of 138,000, and consistent with a negative weather impact in the report," he added. "This estimate, however, is very likely larger than the true weather impact on payroll employment."

While the report was not good, Hatzius didn't announce any revisions in its outlook for the economy or monetary policy.

"The information in today's employment situation report does not change our expectation that the Fed will continue to taper its asset purchases by $10bn at the January meeting," he said.

Retail trade added 55,000 jobs in December. Job gains occurred in food and beverage stores (+12,000), clothing stores (+12,000), general merchandise stores (+8,000), and motor vehicle and parts dealers (+7,000). Retail trade employment increased by an average of 32,000 per month in 2013.

Wholesale trade employment rose by 15,000 in December. Over the past year, wholesale trade added an average of 8,000 jobs per month.

Employment in professional and business services continued to trend up in December (+19,000). This industry has added 637,000 jobs over the past 12 months. Within this industry, temporary help services added 40,000 jobs in December. In contrast, accounting and bookkeeping services lost 25,000 jobs over the month.

Manufacturing employment continued to trend up in December (+9,000). Manufacturing added 77,000 jobs in 2013, compared with an increase of 154,000 jobs in 2012.

Employment in the information industry decreased by 12,000 in December, reflecting a decline in motion picture and sound recording (-14,000). Employment in the motion picture industry can be volatile from month to month. Over the year, employment in information has shown little net change.

Construction employment edged down in December (-16,000). However, in 2013, the industry added an average of 10,000 jobs per month. Employment in non-residential specialty trade contractors declined by 13,000 in December, possibly reflecting unusually cold weather in parts of the country.

Health care employment changed little in December (-6,000). Over the past year, job growth in this industry slowed to an average of 17,000 per month, compared with an average monthly gain of 27,000 in 2012.

In December, employment in most other major industries changed little.

Average hourly earnings of all employees on private nonfarm payrolls edged up by 2 cents in December. Over the past 12 months, average hourly earnings have risen by 42 cents, or 1.8%. From November 2012 to November 2013, the Consumer Price Index for All Urban Consumers (CPI-U) rose by 1.2%.

Turning now to the survey of households, the unemployment rate decreased by 0.3 percentage point in December to 6.7%. Over the year, the unemployment rate declined by 1.2 percentage points, and the number of unemployed persons fell by 1.9 million. In December, there were 3.9 million unemployed persons who had been jobless for 27 weeks or more, little changed over the month but down by 894,000 over the past year.

The labour force participation rate declined to 62.8% in December. Over the year, this rate declined by 0.8 percentage point. The employment-population ratio, at 58.6%, was unchanged in December and over the past 12 months. In fact, this measure has held at or near this level since late 2009.

Among those neither working nor looking for work in December, 2.4 million were classified as marginally attached to the labour force, little changed from a year earlier. These individuals wanted a job, were available for work, and had looked for a job within the last 12 months. The number of discouraged workers, a subset of the marginally attached who believed that no jobs were available for them, was 917,000 in December, down by 151,000 from a year earlier. I would

The seasonal adjustment factors for the household survey are updated each year with the release of the December data. Seasonally adjusted estimates going back 5 years (to January 2009) were subject to revision.

In summary, the unemployment rate declined from 7.0 to 6.7% in December, and nonfarm payroll employment edged up (+74,000).

 Soft jobs report: Bad weather or bad economy?

 

Surprising jobs number  adds confusion: Economist: FRI 10 JAN 14 | 10:04 AM ET - - Thomas Lee, JP Morgan chief US equity strategist, and Diane Swonk, Mesirow Financial chief economist & senior managing director, react to December's disappointing jobs report and discuss how the low number will impact the market. Swonk says the number is inconsistent and adds confusion.

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