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  • Writer's pictureNick Andriacchi

December Jobs Report

  • According to ADP the USA added 807,000 jobs last month


  • Unemployment claims remain near a 52 year low.


  • Temporary help ended the winning streak losing 1,600 jobs with a penetration rate of 1.87%

Analysis of the December Employment Report


Last month I asked the question, could the US Savings rate be an indication that people are coming back to work?

The US savings rate, which soared at the beginning of the pandemic as the government poured money into people’s pockets, was down again last month. The ending of enhanced UI payments, coupled with very high inflation is eroding individual’s ability to save money.

As companies have been increasing wages and adding other incentives to encourage talent to return to work, we are seeing ample evidence that they are coming back. Here is basis for my statement:

1. U6 unemployment has fallen more than 1% since September


2. Prime age labor participation rate is up .3% since September


3. A HUGE UPWARD REVISION in the October employment number (which happens to be the first full month after the end enhanced UI benefits)


4. Overall, the number of people either working or looking for work rose by 168,000 last month—the third straight monthly increase.

The November JOLTS report that was just released shows 10.4 million jobs available and another 4.5 million people quit their jobs as The Great Resignation continues.




The Nitty-Gritty Details

· A more encompassing measure of unemployment (U6) that includes discouraged workers and those holding part-time jobs for economic reasons dropped to 7.3%.

· The change in total nonfarm payroll employment for October was revised up by 102,000, from +546,000 to +648,000, and the change for November was revised up by 39,000, from +210,000 to +249,000. With these revisions, employment in October and November combined is 141,000 higher than previously reported. (Monthly revisions result from additional reports received from businesses and government agencies since the last published estimates and from the recalculation of seasonal factors.)

· Prime age labor force participation rate (ages 25-54) was unchanged this month at 81.9%. This number has been stagnant for a number of months and is still down by 1.2% since February 2020, the last month before the pandemic started.

· The overall labor force participation was unchanged at 61.7%.

· The average workweek for all employees on private nonfarm payrolls was unchanged at 34.7 hours in December. In manufacturing, the average workweek edged down by 0.1 hour to 40.3 hours, and overtime edged down by 0.1 hour to 3.2 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls edged up by 0.1 hour to 34.2 hours.

· Average hourly earnings are up 4.7% from the same period a year ago, this reinforces that demand for labor is very strong.

· In December, average hourly earnings for all employees on private nonfarm payrolls increased by 19 cents to $31.31. In December, average hourly earnings of private-sector production and nonsupervisory employees rose by 18 cents to $26.61.

· APD reported that 807,000 jobs were created in November

Source: ADP, BLS, CNBC, ABC News

JOLTS Report January 4, 2022


Job Openings

On the last business day of November, the number and rate of job openings decreased to 10.6 million (-529,000) and 6.6 percent, respectively. Job openings decreased in several industries with the largest decreases in accommodation and food services (-261,000); construction (-110,000); and nondurable goods manufacturing (-66,000). Job openings increased in finance and insurance (+83,000) and in federal government (+25,000). The number of job openings decreased in the South and Midwest regions.

Hires

In November, the number and rate of hires were little changed at 6.7 million and 4.5 percent, respectively. Hires were little changed in all industries and in all four regions.

Separations

Total separations includes quits, layoffs and discharges, and other separations. Quits are generally voluntary separations initiated by the employee. Therefore, the quits rate can serve as a measure of workers’ willingness or ability to leave jobs. Layoffs and discharges are involuntary separations initiated by the employer. Other separations includes separations due to retirement, death, disability, and transfers to other locations of the same firm.

In November, the number of total separations increased to 6.3 million (+382,000). The total separations rate was little changed at 4.2 percent. Total separations increased in accommodation and food services (+130,000) but decreased in federal government (-9,000). Total separations were little changed in all four regions.

The number of quits increased in November to a series high 4.5 million (+370,000). The quits rate increased to 3.0 percent, matching the series high in September. Quits increased in several industries with the largest increases in accommodation and food services (+159,000); health care and social assistance (+52,000); and transportation, warehousing, and utilities (+33,000). The number of quits increased in the Northeast, South, and Midwest regions.

In November, the number of layoffs and discharges was little changed at 1.4 million. The layoffs and discharges rate was unchanged at 0.9 percent. Layoffs and discharges decreased in federal government (-4,000). The number of layoffs and discharges was little changed in all four regions.

The number of other separations was little changed in November at 377,000. The number of other separations decreased in real estate and rental and leasing (-5,000) and in federal government (-3,000). Other separations increased in the Northeast region.

Net Change in Employment

Large numbers of hires and separations occur every month throughout the business cycle. Net employment change results from the relationship between hires and separations. When the number of hires exceeds the number of separations, employment rises, even if the hires level is steady or declining. Conversely, when the number of hires is less than the number of separations, employment declines, even if the hires level is steady or rising.

Over the 12 months ending in November 2021, hires totaled 74.5 million and separations totaled 68.7 million, yielding a net employment gain of 5.9 million. These totals include workers who may have been hired and separated more than once during the year.

Establishment Size Class

In November, the job openings rate decreased in small establishments with 10-49 employees. The hires rate increased in large establishments with 5,000 or more employees. The quits rate increased in small establishments with 1-9 employees and in large establishments with 1,000 to 4,999 employees. Both the layoffs and discharges rate and the total separations rate increased in large establishments with 1,000 to 4,999 employees. For a more in-depth description of the JOLTS establishment size class estimates.

Please visit www.bls.gov/jlt/sizeclassmethodology.htm.

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