November Jobs Report…..
A Chunk of Coal Wrapped in a Bow?
Well the November jobs report was released last week and now the numbers have had time to be revised and settled. The good news was that stated unemployment declined to 4.6%. The not-so-good news is that total new non-farm payroll employment increased by just 178,000. The employment gains primarily occurred in professional and business services as well as in the health care sector.
Interestingly, where the greatest gains were expected to be (retail) did not seem to take place with any robust effort. While the unemployment rate decreased in November by 0.3% both the net unemployment rate and the total number of (reported) unemployed persons showed very little movement.
We also saw very little movement in the number of part-time employment for November. Again due to the holiday season, the obvious areas one would expect increases in employment would be in the retail sector and specifically in the part-time representation of employment hires. In fact, what is typically classified as involuntary part-time workers is still down for the year by over 400,000 persons. To help put that in perspective, for 2015 the average monthly employment increase reflected 229,000 workers being hired each month. For 2016, that average monthly employment increase has been down around 180,000.
The main question that continues to be the gorilla in the room is how many able-bodied workers in the U.S. employment sector have removed themselves from the roles of “workers seeking employment?” The bottom line is have so many potential workers given up looking for employment that the unemployment numbers now no longer take them into account in their estimates? If that is the case (as many economists and policymakers believe) then just how far off are the actual published unemployment numbers?
Most economists have explained for years that between 3-5% of the average workforce will never be available for employment for an entire plethora of reasons. If that percentage holds true……then is the Labor Department suggesting that we are close to 0% unemployment?! Obviously not! For that reason, it is likely that the published number of 4.6% is not as accurate as we would like to believe. If you factor in the millions of people who have been removed from the “seeking employment,” category……then the actual unemployment rate is much higher than the published rate.
Fed Rate Increase On the Way……
Keep your eyes open as the Fed is about to let us know what the new Federal Reserve Interest Rate is about to be. Smart money is for at least a .25% increase in the rate! The theory is that such an increase will help to tamp down inflation fears yet not throw cold water on the enthusiasm being showered on the economy since the election. Of course, any action the Fed takes may also impact employment rates in the country.