December employment summary and November international trade

there isn’t much good to be said about the two December employment reports released by the BLS on Friday….against a median forecast of 200,000 new jobs, the establishment survey from Friday’s employment summary indicated just 74,000 jobs were added in December, the slowest payroll jobs growth in 3 years, while the weekly hours for those working decreased…and the headline result from the household survey showed that the unemployment rate dropped to 6.7% from 7.0% in November, almost entirely because over a half a million of us gave up looking for work and dropped out of the labor force, and hence weren’t counted when the jobless percentage was calculated…

Establishment Survey Shows December Added Least Lousy Jobs in 3 years

with the addition of just 74,000 jobs in December, and the revision of the change in November job additions from 203,000 to 241,000 (October’s job count was unrevised at 200,000), the total job creation for 2013 is now in the books at 2,186,000, which means, unless there are further revisions, the total job creation this year was actually less than the anemic 2,193,000 jobs created in 2012; although that was less than the 2,395,000 increase in the working age population, roughly one-third of that population increase represents retirees, students, and housewives or those who wouldn’t consider working otherwise, so that means on net our economy only generated 586,000 more jobs in 2013 than needed to keep up with the increase in the labor force, or less than 49,000 a month…at that pace, it would take another 14 years to make up the 1.3 million jobs lost and the 6.6 million jobs needed that were not created since 2008 to return to the level of labor force participation we saw in 2007…our FRED bar graph below shows the monthly number of payroll jobs gained or lost since the beginning of 2008; clearly, it takes a better pace than we’ve seen just to recover from the 12 month period in 2008-09 when monthly job losses approached the 400,000 to 800,000 level…

FRED Graph

the types of jobs created in December were mostly of the low paying variety we’ve been seeing most of this year as well…on a seasonally adjusted basis, there were 55,300 additional jobs created in the retail sector; of those, 11,800 were in food and beverage stores, 11,600 were in clothing and accessories stores, 7,600 were in general merchandise stores, and 7,300 were with motor vehicle and parts dealers; these are retail jobs in excess of what would normally be added in December; the unadjusted data indicates there were 176,500 additional retail jobs over the month…an additional net of 19,000 jobs were generated in professional and business services, with a gain of 40,400 temporary help service jobs offset by a loss of 24,700 accounting and bookkeeping jobs…15,400 more jobs were created in wholesale trade area, with most of those in electronic markets, working with or as agents and brokers, while the manufacturing sector added 9,000 jobs, 5,000 of which were involved in fabricating metal products, while manufacturers of transportation equipment added 3,800 and electronic instruments makers cut 3,500 …(note that there may be an undercount of jobs in manufacturing in BLS data, as many manufacturers are now hiring agency temps as virtual full time worker as a way to avoid union scale wages and benefits that would be due full-time employees; BLS counts these as temporary help service jobs)…the leisure and hospitality added 9,000 jobs, as 14,400 were added in accommodation and food services and 11,600 were lost in performing arts and spectator sports….an additional 5,100 jobs were created in mining, with 3,500 of those in mining support activities…

areas where payroll employment declined in December included construction, where there were a seasonally adjusted 16,000 less jobs, largely due to the loss of 12,900 working for nonresidential specialty trade contractors; a number of analysts are blaming this on the weather; in fact, some call the whole report into question due to the cold & snowy weather…but this is December, and the data is seasonally adjusted, so the weather affected this report only insofar as it was that much worse than a normal December; the unadjusted data shows 216,000 less construction jobs, so in effect, a reduction of 200K in the construction labor force in December is considered normal…for perspective, consider that a seasonally adjusted 146,000 new jobs were created in the month that hurricane Sandy impacted the jobs report…December also saw a shrinkage of 13,000 government jobs, with a loss of 14,900 in local school districts offsetting gains of 5,000 other jobs at the local level….there was also a lost of 12,000 jobs in information sector, with cuts of 13,700 in the motion picture and sound recording industries overwhelming small gains elsewhere in the sector…and there was a shrinkage of 6,000 jobs in health care, the first time that sector has seen job losses in over ten years; there were 4,100 less jobs in  ambulatory health care services, 2,400 less in hospitals, while 5,000 more were working in social assistance…payroll employment in the remaining sectors, finance, transportation and warehousing, and private education, was little changed for the month…

our usual FRED bar graph below shows the monthly change in payroll employment in selected sectors since the beginning of 2012, with the scale on the left indicating the increase of payroll jobs in thousands when the bar extends upwards, and the decrease in jobs when it points each monthly grouping of 8 bars, the monthly change in manufacturing employment for that month is indicated in blue, the change in monthly construction employment is in red, the monthly change in retail employment is in dark green, the monthly change in government jobs is in yellow, and the change in employment in professional and business services, which includes everything from legal services to hauling out the trash, is in grey; also included are the CES employment subcategories of jobs in bars and restaurants in light green, and new health care jobs in orange, with private education jobs shown in violet…December is represented by the bar cluster on the far right; the big jump in retail jobs (dark green), and the loss of construction (red), government (yellow) and health care (orange) jobs is fairly obvious, as is the change from November when all eight categories gained jobs…(click to enlarge)

FRED Graph
as we mentioned in opening, the report from employers also indicated that the average workweek for all payroll employees fell from 34.5 hours to 34.4 hours; in addition, the average workweek for production and nonsupervisory employees fell to 33.6 hours from 33.7 hours…the largest hour cutbacks were in mining and construction, which could be weather related, while hours for utility workers rose 41.1 to 41.7 hours…the manufacturing workweek was unchanged, at 41.0 hours, and factory overtime was up by a tenth of a hour to 3.5 hours…the average hourly pay for all workers was up 2 cents to $24.17, with utilities workers, whose hours rose from 41.6 a week to 42.0, apparently seeing an 33 cent an hour gain to $35.55 an hour, the highest average pay for any sector, while the lowest paid workers in leisure and hospitality gained 8 cents and hour to average $13.66 an hour…meanwhile, average pay for nonsupervisory workers was up 3 cents to $20.35, with utility linemen again making the most at $32.77 an hour, with pay for nonsupervisory leisure and hospitality workers also up by 10 cents to $11.93 an hour…

Labor Force Participation Rate at 36 Year Low Drives Official Unemployment Rate Down to 6.7%

the bad news from the Current Population Survey (CPS), more commonly referred to as the household survey, was that the labor force participation rate fell to a 36 year low at 62.8% in December, fractionally eclipsing the new low that was set just two months ago in October, when everyone thought that new low was a one time aberration caused by the government shutdown during the reference week…this ‘participation rate’ is the percentage of the population either working or looking for work, and it’s continual descent is indicative of many who would be willing to work if they thought they could find a job just giving up even looking…at 0.8% lower than a year ago, this represents nearly 3 million of us who’ve given up entirely over the past year alone; even the number of those not in the labor force who will still admit they want a job if they could get one has fallen by more than 600,000 over that span, as many of those who are discouraged start to tell themselves that not participating is where they want to be…we can imagine that the longer these long term unemployed are out of the labor force, the more likely they’ll slip from the radar entirely…we’ve stretched out our FRED graph below to take in 1978, the last time the labor force participation rate, which is shown in red, was as low as today…for those of you too young to remember, that was an era when not many women worked outside of their own homes…and on the same graph we show the employment to population ratio in blue over the same time span; in December this ratio, which could be thought of as the employment rate, was stuck at 58.6%, the same as it was in November, and the same as it was a year ago, and the same as it was over four years ago…

FRED Graph

as we look at the data from this survey, we should recall that it’s extrapolated from a telephone poll of roughly 60,000 households representing around 110,000 workers, so with that small sampling there’s a margin of error of +/- 300,000 in the monthly change in the number unemployed, and +/- 0.2% in the unemployment rate…in December, the change of both the number of employed and the unemployment rate was greater than that margin of error, so at least we can be sure of the direction of the change in both…according to the seasonally adjusted employment data from the household survey, 144,586,000 of us reported being employed in December, which was 143,000 more than November; another 10,351,000 of us reported being unemployed, which was a decrease of 490,000 from the previous month; thus the number of us counted as being in the labor force fell by 347,000 to 154,937,000, and the percentage of the labor force that was unemployed fell to 6.7%…since the working age population increased by 178,000 over the month, that meant the total of those who were not in the labor force and hence not counted as employed nor unemployed rose by 525,000 to a new all time high of 91,808,000

the number of us working part time declined by 89,000 to 27,372,000 in December; however, the number of us who were working part time who indicated they wanted to be working full time but who could only find part time work, or who had their hours cut, increased by 49,000 to 7,771,000…even with that increase, however, the alternate measure of unemployment known as U-6 remained unchanged at 13.1% in the face of a smaller labor force divisor…the number of us unemployed for more than 27 weeks and who are thus now cut off from further unemployment rations fell by 166,000 to 3,878,000; as a percentage of all unemployed, however, the long term jobless are now 37.7%, up from 37.4% in November…recall that some of the numerical reduction represents those among the long term unemployed who didnt look for a job in December and who hence were not counted….among those not officially in the labor force and hence not counted, an additional 5,932,000 reported that they still want a job; of those, 2,427,000 were categorized as “marginally attached to the labor force” because they’ve  looked for work sometime during the last year, but not during the 30 day period covered by the December survey…917,000 of those were further characterized as “discouraged workers“, because they say that they haven’t looked for work because they believe there are no jobs available to them…

Trade Deficit Smallest in Four Years on Declining Oil Imports

the other important release of the past week was on on our International Trade in Goods and Services for November (full pdf), which showed our seasonally adjusted trade deficit was the smallest in more than four years, mostly due to lower oil importsthe Department of Commerce reported that record November exports of $194.9 billion, $1.7 billion more than revised October exports of $193.1 billion, and imports of $229.1 billion, $3.4 billion less than revised October imports of $232.5 billion, resulted in a goods and services deficit of $34.3 billion, down from the revised trade deficit of $39.3 billion in October…seasonally adjusted October exports were revised up by $0.4 billion and imports of goods were revised down by $1.1 billion, and thus October’s deficit was down $3.6 billion from the near $43.0 billion trade deficit of September….our FRED bar graph below shows the monthly change in exports in blue and the monthly change in imports in red since November 2011, with the net of them resulting in the change in the balance of trade, which is shown in brown; each group of three bars represents one month’s of trade data over the past two years, with positive changes above the ‘0’ line and negative changes below it; when exports (blue) increase in a given month, they add to the trade balance change in brown; conversely, when exports decrease, they subtract from the brown trade balance bar; the action of imports on the balance is just the reverse; when imports increase in a given month, they subtract from the brown trade balance for the month, but when imports decrease, the balance of trade rises as a result….with two months of significantly better trade data in the books, we’d guestimate that the change in trade could add more half a percent to 4th quarter GDP, before any adjustment for inflation is applied….

FRED Graph

our November deficit in goods shrunk by $4.9 billion from October to $53.9 billion as our exports of goods increased $1.5 billion to $137.1 billion, and our imports of goods decreased $3.4 billion to $191.0 billion, while our trade surplus in services increased $0.2 billion to $19.7 billion as our imports of services increased $0.1 billion to $38.1 billion and our exports of services services increased $0.3 billion to $57.8 billion….as you see from the FRED graph, monthly changes are quite volatile; year to date, our trade deficit has been $435.1 billion on exports of $2,079.1 billion and imports of $2,514.2 billion, in contrast to the trade deficit of $496.3 billion on $2,021.9 billion in exports and $2,518.2 billion in imports over the first 11 months of 2012, so generally, our exports have been increasing over time while our imports have remained stable….

the end use categories of imports that saw increases in November included imports of automotive vehicles, parts, and engines, which increased by $1,059 million to $27,229 million, and imports of capital goods, which were up $925 million over October…the capital goods contributing most to that increase were imports of computers, which increased by $686 million to $6,033 million in November, and imports of computer accessories, which increased by $472 million to $5,203 million, which were partially offset by decreases of $361 million in imports of telecommunications equipment and $237 million of semiconductors…the import category that accounted for the lions share of the import decreases in November was industrial supplies and materials, which fell $4,297 million to $53,804 million on a $2,547 million decrease in imports of crude oil, a $826 million decrease in imports of fuel oil, a $221 million decrease in imports of other petroleum products and a $270 million decrease in imports of non-monetary gold…our imports of foods, feeds, and beverages also fell by $288 million to $9,538 million on a decrease of $158 million in imports of fruits and fruit products and a $115 million decrease in imports of fish and shellfish….our imports of consumer good fell by $119 million to $44,752 million on a $565 million decrease in imports of pharmaceuticals and and a $426 million decrease in imports of artwork, antiques and collectibles, which was mostly offset by increases of $740 million in cell phone imports and $284 million in imports of apparel other than cotton and wool, and our imports of other goods not categorized by end use fell $764 million to $5688 million…

end use categories that saw exports increase in November included industrial supplies and materials, which were up by $707 million to $43,815 million on increases of $264 million in both exports of chemicals and finished metal shapes, a $263 increase in exports of crude oil, and a $240 increase in exports of fuel oil, while exports of non-monetary gold fell $796 million; also capital goods, in which our exports increased $336 to $45,350 million on a $390 million increase in exports of civilian aircraft and a $163 million increase in exports of engines for such aircraft, which was partially offset by a $210 million decrease in exports of semiconductors…November also saw a $141 million increase in exports of autos, trucks engines and parts to $13,091 million and a  $483 million increase to $5,552 million in exports of other goods not otherwise categorized… decreasing in November were exports of consumer goods, which fell $515 million to $15,943 million on $492 million less exports of artwork, antiques and collectibles, $172 million less diamonds, and $158 million less exports of jewelry, partially offset by a $191 million increase in exports of pharmaceuticals; also lower by $124 million were our exports of foods, feeds and beverages despite a $212 increase in soybean exports as wheat exports fell $190 million and fish, corn and rice exports fell by lesser amounts…

the graph below, from Bill McBride, is illustrative of the impact that our reduction of oil imports has had on our trade overall; reading from the top $0 line down, the black graph line tracks our deficit in petroleum trade only in billions of dollars since 1998; over the same span, the red graph shows our trade deficit for everything else except oil; combined together, those two are of course our total trade deficit, which Bill has graphed in blue…it’s pretty clear that as our oil deficit has fallen, so has our overall deficit, and by virtually the same amount…meanwhile, our deficit in everything else has tracked at roughly the same magnitude, near $20 billion, over the entire four years of our recovery…

McBride TradeDeficitNov2013 with oil

it wasn’t only trade in petroleum that improved in November, however…our bilateral goods trade deficit with China, which had reached a record $30.5 billion in September, fell to $26.9 billion, from $28.9 billion in October…nonetheless, that was still nearly half of our overall $53.9 billion deficit in goods for the month…our bilateral goods deficit with the European Union also shrunk by $4.2 billion to $10.1 billion in November as our imports decreased and our exports to the trade block increased…other large bilateral goods deficits in November were with Germany at $5.9 billion, Japan at $5.8 billion, OPEC at $4.8 billion, Mexico at $4.1 billion, Saudi Arabia at $2.9 billion, Ireland at $1.8 billion, Venezuela at $1.5 billion, Canada at $1.5 billion, Korea at $1.2 billion, and India at $1.0 billion…meanwhile, we ran small surpluses in November goods trade with Hong Kong at $2.9 billion, Australia at $1.2 billion, Singapore at $1.2 billion and Brazil at $1.7 billion…

the Bloomberg graphic below was taken from the Zero Hedge post on November’s trade, where it was presented without comment or a link; on the left, we see the top ten countries we import from, and within each country’s block the percentage of our total imports that come from that country, the change in imports from that country on a year over year basis, with green indicating an increase and red a decrease in imports from that trade partner, and apparently on the top line is the change in our imports from that country on a GDP basis as of the last report, which would be adjusted for inflation using chained 2009 dollars…similarly, on the right are the top ten countries we export to, the percentage of our exports that goes to each, and the year over year change in our exports to each on both a current dollars and inflation adjusted dollars basis…meanwhile, the center block shows our goods imports on a current dollar basis over the past year at $2,294.2 billion, down 0.4%, and our goods exports at $1,585 billion, up 1.9%, giving us a negative trade balance in goods over the past year of $706 billion..

Trade November 2013 BLM via ZH

(the above is my weekly commentary that accompanied my sunday morning links emailing, which in turn was mostly selected from my weekly blog post on the global glass onion…if you’d be interested in getting my weekly emailing of selected links that accompanies these commentaries, most coming from the aforementioned GGO posts, contact me…)

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