December 2018 BLS Jobs Situation - One Of The Best Growth Months Of 2018

The headline seasonally adjusted BLS job growth was well above expectations. The internals looked ok, and the pace of jobs growth improved.

Analyst Opinion of the BLS Employment Situation

The household and establishment surveys both showed different growth. The year-to-date employment was the best since 2015. Last month's employment gains were revised upward. The growth this month was well above expectations. Just considering this month's data - this month was one of the best in 2018.

Note the following from the BLS:

Seasonally adjusted household survey data have been revised using updated seasonal adjustment factors, a procedure done at the end of each calendar year. Seasonally adjusted estimates back to January 2014 were subject to revision.

Overall, the data this month will be revised downward due to the government shutdown (as the cutoff for this data was before the shutdown). Could this be the last hurrah as the economy is slowing?

  • The year-over-year rate of growth for employment accelerated this month (red line on graph below). This is a year-over-year analysis which has no seasonality issues.

  • Economic intuitive sectors of employment were positive.
  • This month's report internals (comparing household to establishment data sets) was fairly inconsistent with the household survey showing seasonally adjusted employment growing 142,000 vs the headline establishment number expanding 312,000. The point here is that part of the headlines are from the household survey (such as the unemployment rate) and part is from the establishment survey (job growth). From a survey control point of view - the common element is jobs growth - and if they do not match, your confidence in either survey is diminished. [note that the household survey includes ALL jobs growth, not just non-farm).
  • The household survey added 412,000 people to the labor force.
  • The National Federation of Independent Business (NFIB)'s monthly Jobs Report is at the end of this post.

A summary of the employment situation:

  • BLS reported: 312K (non-farm) and 301K (non-farm private). Headline unemployment rate worsened trom 3.7 % to 3.9 %.
  • ADP reported: 179K (non-farm private)
  • In Econintersect's December 2018 economic forecast released in late November, we estimated non-farm private payroll growth at 200,000 (based on economic potential) and 200,000 (fudged based on current overrun / under-run of economic potential).
  • The market expected (from Econoday):
Seasonally Adjusted Data Consensus Range Consensus Actual
Nonfarm Payrolls - M/M change 160,000 to 200,000 190,000 312,000
Unemployment Rate - Level 3.6 % to 3.8 % 3.7 % 3.9 %
Private Payrolls - M/M change 160,000 to 195,000 185,000 301,000
Manufacturing Payrolls - M/M change -6,000 to 23,000 20,000 +32,000
Participation Rate - level 62.8 % to 62.9 % 62.8 % 63.1 %
Average Hourly Earnings - M/M change 0.2 % to 0.4 % 0.3 % +0.4 %
Average Hourly Earnings - Y/Y change 3.0 % to 3.3 % 3.2 % +3.2 %
Av Workweek - All Employees
34.4 hrs to 34.5 hrs
34.5 hrs 34.5 hrs

The BLS reports seasonally adjusted data - manipulated with multiple seasonal adjustment factors, and Econintersect believes the unadjusted data gives a clearer picture of the jobs situation.

Non-seasonally adjusted non-farm payrolls grew 60,000 - better than last year and better than most Decembers this century. The following chart compares the jobs gains this month with the same month historically:

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