More Job Market Malaise
December was probably not a one-off.
January 11, 2014 - 12:56 am
On the Wednesday conference call following the release of the ADP’s December National Employment Report on private-sector hiring, Mark Zandi, chief economist at Moody’s Analytics, the firm primarily responsible for the report’s preparation, told attendees: “It feels like the job market has kicked into a higher gear.”
It’s hard to blame Zandi for wanting this to happen. After what he described as a lot of “false starts” in the past four and a half years since the recession officially ended, who doesn’t want to see some better employment news?
ADP’s report showed that private firms added 238,000 jobs. Though far from outstanding, that’s a very decent number which, if replicated for about the next three years, would finally get the job market into the neighborhood of where it needs to be. I for one would be glad to start arguing that the private sector has finally figured out how to maneuver around the Obama administration’s legal and regulatory web and its Keynesianism-on-steroids mindset, and is at long last beginning to genuinely recover the dynamism that many of us thought was lost forever.
Friday’s employment report from the government blew those hopes to bits. On a seasonally adjusted basis, the economy added only 74,000 jobs; the private sector added only 87,000. Though the official unemployment rate declined to 6.7 percent, the primary reason for its decline was the same as it’s almost always been in the four-plus years since its 10 percent peak in late 2009: Vast hordes of Americans stopped looking for work, bringing the labor force participation rate to a 36-year low. The job market malaise remains in full force.
Within minutes of the report’s release, Zandi was in complete denial on CNBC’s Squawk Box:
I wouldn’t pay any attention at all to these numbers. They’re not consistent with anything. … they’ll be revised up and away.
The problem is that Friday’s raw numbers before seasonal adjustment — that is, Uncle Sam’s best estimates of what actually happened — tell us that the job market took a significant turn for the worse in December that even extraordinary upward revisions won’t be able to negate:
Between February and November, the overall job market turned in improvements over the same month in 2012 seven out of ten times. The average improvement was almost 32,000. As seen above, December went the wrong way by an astonishing 170,000. That’s a turn for the worse of over a quarter million jobs when measured against November, and of over 200,000 compared to the average of the previous ten months.
The private sector deterioration is almost as bad. It shows eight of ten year-over-year improvements from February to November, with an average pickup of 24,000. Its December decay against November was 208,000, and over 180,000 compared to the previous ten months’ average.