The Market Ticker
Commentary on The Capital Markets- Category [Employment]

This report is kinda nasty, despite the cheering on CNBC and elsewhere.

Total nonfarm payroll employment rose by 252,000 in December, and the unemployment rate declined to 5.6 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in professional and business services, construction, food services and drinking places, health care, and manufacturing.

Sure it did.....

Well, if you believe the cooked numbers that is.  But the internals look pretty nasty; let's start with the ones that are being talked about.

Average hourly earnings fell.  Not by a lot, and average hours remained stable at 34.6 (which is far more important than hourly earnings, incidentally.)

But -- this is from the establishment survey and is seasonally-adjusted (that is, made-up.)

The household survey tells a different story entirely.

The household survey says that the total number of people employed fell by 476,000 last month.  This, on the back of a -270,000 print last month, making this one month off from a trend (three makes a trend) and worsening from the last report.  In addition the number of those who left the labor force increased by 959,000 last month on the back of 506,000 leaving the labor force last month -- also two months of three, and again worsening.

The employment:population ratio decreased by two tenths, also being the second month in a row of declines.

So the bottom line here is that the "decrease" in unemployment had exactly nothing to do with improved employment (in fact actual employment declined for both of the last two months) but instead was comprised of people who are unemployed giving up on finding a job!

That, of course, is not being reported -- all that is being talked about is how "strong" this report is given the establishment figure.  However, the lie factory is running into a fairly serious problem in that full employment (which is commonly regarded as a ~5% unemployment rate) should bring significant wage pressures (upward) -- that isn't happening, and the reason it's not is quite simple:

The actual number of people employed is falling, not rising, and as a result there is no reason for employers to pay more!

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