December is a most unreliable month for labor market statistics. Holidays and seasonal hiring distort the numbers. They demand any data point be looked at with more of a gimlet eye than we would even usually cast in the direction of weekly or monthly numbers.
The weekly U.S. unemployment claims published Thursday are a case in point. These show a modest seasonally adjusted rise on the previous week. Yet the numbers from nine of the 50 states — including the state with the largest work force, California — were estimates because the holidays interfered with data collection. On top of that, the previous week’s number was itself revised using data in which the numbers from 19 states were estimates because of the holidays. We don’t want to trivialize the difficulties of collecting the data or minimize the Bureau of Labor Statistics’s considerable efforts to get them as accurate a possible, but the resultant number isn’t indicative of very much, let alone any underlying trend.
It certainly won’t reflect the monthly jobs numbers for December due to be published Friday. Many economists expect these to show U.S. payrolls to have expanded by 150,000 jobs, pretty much the average for the year (151,000 jobs a month through November.) Though the December total is expected to be up on November’s 149,000 net job increase, taken together, they point to the pace of job recovery slowing a tad in recent months. Yet muddying the waters, Thursday’s monthly report from ADP, a payrolls processing company, indicates that private-sector employers added 215,000 jobs in December, almost double the number expected, with the fiscal cliff fiasco in Washington not having as much impact on the job market as was feared.
The bigger picture is that, like the economy as a whole, the U.S. labor market is making slow but steady progress from the depths it was brought to by the 2008 global financial crisis. It is hard sledding beyond doubt. The number of Americans in non-farm employment has risen from its trough of 129.2 million in February 2010 to 133.9 million in November, though it hasn’t recovered to its all-time peak of 138 million reached in January 2008. An expanding workforce, because of demographics (a net 10 million new entrants to the workforce over the past decade) and more recently from unemployed who have returned to looking for work, means that the 4.7 million new jobs created since February 2010, including the 1.8 million created in 2012, haven’t made much of a dent in the reported unemployment rate. Though down from a peak of 10% in October 2009 to 7.7% in November, it remains far above March 2007’s trough of 4.4% (and we’ll skip here the whole debate about counting discouraged and half-employed workers).
Companies remain cautious hirers and lay-offs still continue, though job cuts in 2012 were the lowest since 1997, according to Challenger, Gray & Christmas, a firm of consultants. Challenger still counted more than half a million lay-offs, however, with the computer industries and financial services among the worst-hit. It sees those industries — plus consumer products, transportation and aerospace and defense — most at risk for more job cuts this month, historically the worst for pink slips. December may be unreliable but January can be treacherous.
Update: December’s net job gain was 155,000, the Labor Department announced Friday. November’s job gain was revised up by 15,000 jobs to 161,000. The unemployment rate was unchanged at a revised 7.8%.