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Not hugely out of line with other recent data but details generally weak all around
- -85k nfp; net revisions -1k (though November now reported at +4k)
- Weakness led by construction (-27k to -53k; weather?) and govt (-4k to -21k)
- Avg hourly earnings +0.2%
- Hours worked unch
- Unemp rate 9.979% to 9.975%
- U6 unemp rate (discouraged workers, etc) 17.2% to 17.3%
- Participation rate 64.9% to 64.6%
- Median duration of unemp 20.2 weeks to 20.5 weeks
- Diffusion index 42.4 to 40.0
Both of the Fed’s dual mandates continue moving against a rate hike.
The Fed’s forecasts call for ‘improvements’ but with high downside risks.
The household survey was substantially weaker than the payroll survey. Although the unemployment rate held steady at 10.0% (9.975% before rounding), the overall levels of the labor force and employment were down significantly — 661k and 589k, respectively. Over the past year, the labor force has fallen 1%; at 64.6% the labor force participation rate is at its lowest level in almost 25 years (August 1985). While some of this may be demographic, at least some of the sharp drop in pariticipation is apt to reverse in coming months, raising the bar for the job growth needed to keep unemployment from rising.
4. Hours worked were flat in December, concluding a quarter in which this index fell 0.5% at an annual rate. This is a much better performance than in recent quarters, and is consistent with expectations that real GDP will post a significant increase for the fourth quarter. We estimate at 4% annualized increase in real GDP for Q4 with upside risk.
5. Although average hourly earnings rose a bit more than we expected on the month, the trend in wages — at 2.2% — continues to drift lower, consistent with the high level of unemployment. The “U6” broad measure of underemployment, which includes marginally attached workers (those who have stopped working and are consequently not counted as part of the labor force) and those working part time who would like full time work — rose 0.1 point to 17.3%.