December 2020 BLS Jobs Situation - Employment Declines

The headline seasonally adjusted BLS job growth declined and was well below expectations, with the unemployment rate unchanged at 6.7 %.

Analyst Opinion of the BLS Employment Situation

Employment recovery from the coronavirus has now stalled.

A summary from the report:

Total nonfarm payroll employment declined by 140,000 in December, and the unemployment rate was unchanged at 6.7 percent, the U.S. Bureau of Labor Statistics reported today. The decline in payroll employment reflects the recent increase in coronavirus (COVID-19) cases and efforts to contain the pandemic. In December, job losses in leisure and hospitality and in private education were partially offset by gains in professional and business services, retail trade, and construction.

Revision of Seasonally Adjusted Household Survey Data: 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 2016 were subject to revision. The unemployment rates for January 2020 through November 2020 (as originally published and as revised) appear in table A on page 7, along with additional information about the revisions.

The economically intuitive sectors were positive for economic growth.

The rate of further recovery will be dependant on the coronavirus effects.

  • The year-over-year rate of growth for employment declined by 0.03 % this month (red line on the graph below). The year-over-year growth rate is 6.1 % below the rate of growth one year ago.

  • This month's report internals (comparing household to establishment data sets) did not correlate with the household survey showing seasonally adjusted employment grew 21,000 vs the headline establishment number declining 140,000. 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 job growth - and if they do not match, your confidence in either survey is diminished. [note that the household survey includes ALL job growth, not just non-farm).
  • The household survey added 31,000 people from 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: -140K (non-farm) and -95K (non-farm private). The headline unemployment rate was unchanged at 6.7 %.
  • ADP reported: an employment decline of 123,000 (non-farm private)
  • In Econintersect's December 2020 economic forecast released in late November 2020, we estimated non-farm private payroll growth at 200,000 (based on economic potential) and 500.000 (fudged based on current overrun / under-run of economic potential). [because the decline was so steep and the recovery so steep, our forecast methodology is not accurate in this period]
  • The market expected (from Econoday):
Seasonally Adjusted Data Consensus Range Consensus Actual
Nonfarm Payrolls - M/M change -50,000 to 302,000 100,000 -140,000
Unemployment Rate - Level 6.6 % to 6.9 % 6.8 % 6.7 %
Private Payrolls - M/M change 50,000 to 300,000 140,000 -95,000
Manufacturing Payrolls - M/M change 11,000 to 40,000 26,000 38,000
Participation Rate - level 61.3 % to 61.6 % 61.5 % 61.5 %
Average Hourly Earnings - M/M change 0.1 % to 0.4 % +0.2 % +0.8 %
Average Hourly Earnings - Y/Y change 4.2 % to 4.7 % 4.4 % 5.1 %
Avg Workweek - All Employees

34.7 hrs to 34.8 hrs

34.8 hrs 34.7 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 job situation.

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