Summary
Earlier today, the Labor Department released December employment data. The report indicated that the unemployment rate fell 0.1% during December, to 4.9%. Also reported was a 108,000 expansion in payroll jobs during the month. Although the latter figure was less than expected, prior months' payroll data continue to raise the question of where did all the jobs lost to Hurricane Katrina go?
_____
* Today's release from the Labor Department indicated that the unemployment rate in December fell 0.1%, to 4.9%. The report also showed an increase of 108,000 payroll jobs during the month.
* Prior months' payroll numbers continue to raise the question of where did all the jobs lost to Hurricane Katrina go? Moreover, the various "bob-and-weave" methodology the Labor Department is employing, coupled with its very "creative" approach to seasonal adjustment, lead quickly to the thought that these numbers can be whatever someone in Washington wants them to be. And since the Labor Department is an instrument of the government's Executive Branch, in which direction do you suspect various biases might run?
(NOTE: Regarding Hurricane Katrina and recent household and payroll surveys, please refer to the material appearing at the end of this missive.)
* The consensus forecast of today's report looked for an unemployment rate of 5.0%, versus the 4.9% that was reported. The consensus prediction of the gain in payroll jobs was around 200,000, well above the actual number reported. However, net revisions to October and November data offset much of this shortfall.
* The two components comprising each month's employment report are the household survey and the payroll survey. The unemployment rate is derived from the former, making it a visible, highly sensitive number for political purposes.
(NOTE: Today's report included revisions to household data going back to January 2001. The unemployment rates broken out in the later table affected by those revisions are so indicated in the table.)
* The payroll survey represents the number generally more important to the immediate behavior of the financial markets, although it also possesses a good deal of political importance. Today's report indicated job growth of 108,000 during December. This compared with a gain of 155,000 in payroll employment during December of last year.
* Today's report contained net revisions that added 71,000 to October and November payroll job creation. October went to +25,000 from +44,000, while November went to +305,000 from 215,000. Thus, including revisions, payroll employment over the last three months grew by 438,000 jobs, versus the 367,000 gain before the October and November adjustments. (During the same three-month period in 2004, payroll employment rose by 569,000.)
The following table breaks out the reported growth in payroll employment over the trailing three months, versus the same period in each of the prior five years.
-----------------------------------------
TRAILING THREE-MONTH PAYROLL EMPLOY-
MENT GROWTH (Thousands of Workers)
-----------------------------------------
Month 2005 2004 2003 2002 2001 2000
-----------------------------------------
Dec. 108 155 83 -154 -174 158
Nov. 305 132 96 6 -293 216
Oct. 25 282 123 59 -377 -12
---------------------------------
Total 438 569 302 -89 -844 362
=== === === === === ===
-----------------------------------------
* For the 12 months ended December 2005, payroll employment expanded by a reported 2.019 million jobs. This compared with an increase of 2.194 million during the 12-month period ended December 2004. Over the six-month periods ended December 2005 and 2004, reported growth was 0.880 million and 0.970 million, respectively.
* According to today's report, average hourly earnings rose five cents during December, or by about 0.3%, to $16.34. This compared with November's $16.29. The November figure was revised down by three cents from last month's report. October also was revised down, by one cent, to $16.28.
* Year over year, average hourly earnings rose 3.1%. This compares with a Consumer Price Index that rose 3.5% for the 12 months ended November (the latest CPI data currently available).
* During the 12 months ended November, the year-over-year gain in the CPI exceeded the year-over-year growth in average hourly earnings in all but one of those months (June 2005), exhibiting the longer-run loss of real purchasing power based on these particular series.
* The table below contains the latest available results for key employment and inflation series. (NOTE: The new material contained in these tables will be posted to the "Data & Charts" section on the GRA website.)
-------------------------------------------------
KEY U.S. EMPLOYMENT AND INFLATION DATA
-------------------------------------------------
PAYROLL
UNEMPLOYMENT EMPLOYMENT AVERAGE HOURLY
RATE CHANGE EARNINGS
(%) (000s) ($s)
--------------- ---------- -----------------
Month Yr. Yr. Yr. Year/
/Year No. Ago No. Ago No. Ago Year
--------------- ---------- ------------------
12/05 4.9 5.4 108 155 16.34r 15.85 3.1%
11/05 5.0 5.4 305r 132 16.29r 15.82 3.0%
10/05 4.9r 5.4r 25r 282 16.28r 15.81 3.0%
09/05 5.1 5.4 17 130 16.19 15.77 2.7%
08/05 4.9 5.4 148 188 16.17 15.74 2.7%
07/05 5.0 5.5 277 83 16.14 15.70 2.8%
06/05 5.0 5.6 175 106 16.07 15.64 2.7%
05/05 5.1 5.6 126 250 16.03 15.62 2.6%
04/05 5.1r 5.5 292 337 16.00 15.58 2.7%
03/05 5.1r 5.7 122 320 15.95 15.54 2.6%
02/05 5.4 5.6 300 94 15.91 15.51 2.6%
01/05 5.2 5.7 124 117 15.90 15.48 2.7%
-------------------------------------------------
EMPLOY. COST INDEX (%)* PRODUCTIVITY (%)#
----------------------- ------------------------
Year Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Yr.
----------------------- ------------------------
2005 0.7 0.7 0.8 - 3.2 2.1 4.7 - -
2004 1.1 0.9 0.9 0.8 2.1 4.5 1.3 2.5 3.4
2003 1.2 0.9 1.0 0.8 3.1 6.6 9.6 0.8 3.8
2002 0.8 1.0 0.8 0.9 6.5 0.8 4.1 0.2 4.0
2001 1.1 1.0 1.0 1.0 -0.4 5.6 1.5 6.5 2.5
2000 1.2 1.0 0.9 0.9 -2.0 7.2 -0.9 4.0 2.7
1999 0.4 1.1 0.9 1.1 3.6 0.5 2.8 7.1 2.8
1998 0.7 0.8 1.0 0.7 3.2 1.2 4.5 2.1 2.8
1997 0.7 0.8 0.8 1.0 -1.2 5.0 3.4 1.6 1.6
-------------------------------------------------
CONSUMER PRICE INDEX## PRODUCER PRICE INDEX@
-------------------------- ---------------------
Month Yr. Year/ Yr. Year/
/Year Index Ago Year Index Ago Year
-------------------------- --------------------
11/05 197.8 191.2 3.5% 158.9 152.1 4.5%
10/05 198.9 190.7 4.3% 160.0 151.1 5.9%
09/05 198.5 189.6 4.7% 158.9 148.9 6.7%
08/05 196.1 189.3 3.6% 156.0 148.5 5.1%
07/05 195.1 189.2 3.1% 155.1 148.3 4.6%
06/05 194.1 189.3 2.5% 153.7 148.2 3.6%
05/05 194.1 188.8 2.8% 153.7 148.3 3.6%
04/05 194.2 187.7 3.5% 154.4 147.7 4.7%
03/05 193.2 187.3 3.2% 153.7 146.4 5.0%
02/05 192.0 186.5 2.9% 152.5 145.6 4.7%
01/05 191.3 185.9 2.9% 151.9 145.7 4.3%
=================================================
12/04 191.2 185.0 3.4% 151.7 145.3 4.4%
11/04 191.2 184.6 3.6% 152.1 144.6 5.2%
-------------------------------------------------
NOTE: All data are seasonally adjusted. *Total
civilian compensation, 3-month change. #Nonfarm
business output per hour, annual rates. ##All
urban, all items. @Finished goods.
-------------------------------------------------
Hurricane Katrina & Related
As an example of how convoluted the situation relating to just Hurricane Katrina has become, have a look at the following passages contained in today's release. Don't take the time to try to understand it. It's here merely as an example of what license is being taken with the calculations:
"Employment Status of Hurricane Katrina Evacuees (Household Survey Data)
"Beginning in October, questions were added to the household survey to identify persons who evacuated from their homes, even temporarily, due to Hurricane Katrina. Data collected through these questions do not account for all evacuees; persons living outside of the scope of the survey -- such as those living in hotels or shelters -- are not included. The questions were asked of persons in the household survey sample throughout the country, since some evacuees relocated far from the storm-affected areas. An additional question determined whether evacuees had returned to their homes by the time of the survey.
"These additional questions provided information to analyze the employment status of this subgroup of evacuees. The total number of evacuees estimated from the household survey may change from month to month as people move in and out of the scope of the survey.
"Information gathered in December showed that about 1.1 million persons age 16 and over had evacuated from where they were living in August due to Hurricane Katrina. These evacuees either had returned to their homes or were living in other residential units covered in the survey in December. About
600,000 of the evacuees had returned to their August 2005 residences. Of all evacuees identified, 58.2 percent were in the labor force in December. The employment population ratio for these evacuees was 51.0 percent. The unemployment rate for persons identified as evacuees was 12.4 percent; it was much
higher for evacuees who had not returned home (20.7 percent) than for those who had returned (5.6 percent)."
There's more, though. Following is something from a section on the BLS (Bureau of Labor Statistics) website that begins, "Will the MLS ['Mass Layoff Statistics'] seasonal adjustment procedure be affected by Katrina?"
"Large, unexpected, rare events such as Hurricane Katrina can cause a time series to deviate from its expected patterns. Changes will be made to the MLS seasonal adjustment procedure through the use of intervention variables to keep the seasonal factors from becoming seriously distorted."
_____
|
