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Tom Cunningham

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January 2019 Jobs Report: Is There Strength in Numbers?

The number of jobs created in January as revealed in the February 1 Bureau of Labor Statistics’ Employment Situation report could only be characterized as strong. The national economy added 304,000 jobs, approaching double the expectation of about 170,000. Strength in hiring was widespread. Construction, manufacturing, and leisure and hospitality stood out as job gaining sectors, but most other sectors also saw increases. Only wholesale trade, financial activities, and information technology were essentially flat. The report comes on the heels of a similarly strong report for December, although it did include a downward revision of December’s numbers of 90,000, leaving that month’s job creation number at 220,000, still well beyond what had been expected. The headline unemployment rate, U3, ticked up 0.1 percentage point to 4 percent. The broader labor underutilization measure, U6, which counts individuals not formally included in the narrow definition of “unemployed” but available for full-time work, jumped from 7.6 to 8.1 percent. The two sets of numbers – job creation and unemployment rates – are generated in different surveys; the partial government shutdown, for technical reasons, was expected to have an impact on the “household survey,” which produces the unemployment rates.  This seems to be the case. Expectations were that headline unemployment would be unchanged, but might tick up a bit due to the shutdown, which, indeed, is what happened. January’s job creation report, even given the revision to December’s numbers, indicates, at least as measured by the labor markets, that the U.S. economy remains strong and on firm footing. About the Author Tom Cunningham holds a Ph.D. in economics from Columbia University and was senior economist with the Federal Reserve Bank of Atlanta from 1985 to 2015. Mr. Cunningham serves as a consultant to MST in the creation and ongoing development [...]

2019-02-13T18:28:35+00:00February 1st, 2019|Blog, Economic Forecasting, Economic Indicators|

December Jobs: An Unexpectedly Big Jump

The December Employment Situation report numbers from the Bureau of Labor Statistics showed a hefty 312,000 jobs added, well above the 180,000 expected. Revisions to the previous two months added another 58,000 jobs. The consensus on new December jobs was notably diffuse this month, some very serious analysts projecting numbers relatively far above and below that average result. No one, however, was suggesting any figure nearly this large. Health care, food services, construction, manufacturing, retail trade, and business services were all strong, with other sectors essentially unchanged.  Average hourly earnings came in a bit above expectation as well, at 3.2% year-over-year. New jobs for 2018 totaled highest since 2015. This dispersion of beliefs no doubt reflects uncertainties about the economy. The fundamentals in the economy look okay (and considering this report, maybe better than okay), albeit a bit off from last year’s unsustainable pace. But the volatility in equity markets suggests risks are rising. Recent political activity has not helped stabilize expectations. The headline unemployment rate rose, .02 percent to 3.9 percent, versus the expectations that it would remain unchanged. The move reflected a small increase in the number of unemployed, most of which is coming from increased voluntary separations. The labor force participation rate was essentially unchanged.  The broadest measure of labor underutilization, U6, remains at 7.6 percent. The headline unemployment rate is still quite low. The real message in today’s report is the extremely strong job creation and decent earnings growth. It’s difficult to assess this as anything other than a very strong report. Unfortunately, this report doesn't clarify the outlook. By itself, with job growth this strong, there is a strong argument for the Fed to continue tightening. Financial markets' view of the future is more mixed, but that's the issue: the base of the economy – employment – [...]

2019-01-04T15:53:44+00:00January 4th, 2019|Blog, Economic Indicators|