The Bureau of Labor Statistics reports that the economy added 200,000 jobs in December, enough to tick the topline unemployment rate down another notch to 8.5%. This was above expectations, but given the decent economic news over the last month, I expected a good report.
October’s numbers revised up to +112,000, and November’s to +100,000. So December jobs grew at almost twice the rate.
The reason that the unemployment rate was able to tick down, however, is that the labor force participation rate remained unchanged at 64.0%. This low participation rate means that, even with the economy growing and the job market improving, a fair number of able-bodied workers have not rejoined the labor force. When they do, and when the labor force participation rate increases, that will put upward pressure on that topline unemployment rate. And unless everyone came into found money, that’s fated to happen. The employment-population ratio also remained unchanged in December (58.5%), despite the job additions. The average workweek and average pay went up very slightly over the month.
We still have a major problem with long-term unemployed, those out of work 27 weeks or more. They account for 42.5% of the total unemployed, a record 5.6 million workers. They need more than just decent reports; a surge in hiring would be required to get them back to work. Involuntary part-time workers fell in December, so really the long-term jobless stick out even more.
Once again, the private sector led the way with 212,000 jobs gained. Government jobs fell by 12,000, and by 280,000 over the course of the year. For 2011, total payroll increased by 1.6 million, with the private sector up 1.9 million. Obviously this is a vast improvement on where we were in the Great Recession, when jobs were evaporating by hundreds of thousands a month. But it’s not nearly robust enough to get back to an equilibrium.
Transportation employment, particularly couriers and messengers, went up sharply in December, along with the expected gains in retail, given the holiday shopping season. A boost to couriers makes complete sense around the holiday season as well. Manufacturing jumped by 23,000 after four months of stagnating. Health care and restaurant services added jobs. Professional business services stalled out.
If you strung together a bunch of months like this, the economy would still not be where it was in the Clinton years, when 300,000 jobs a month were created on average. This is a decent growth report that, even if replicated, would still take years to get back to a normal rate of employment.