Jobs Report — December 2017 — Just 148,000 Net New Jobs, But the Unemployment Rate Remains at 4.1 Percent, a 17-Year Low

The U.S. created 148,000 net new jobs (preliminary) in December 2017 as reported by the U.S. Bureau of Labor Statistics, 50,000 jobs short of the 198,000 consensus among economists according to MarketWatch.

The net gain in jobs totaled 2.055 million in the prior 12-months at an average 171,250 per month.  Total net job gains in the prior 12-months still significantly trails the 3.129 million level seen in February 2015, as shown in the graph.  Part of the decline can be attributed to the dearth of skilled people to hire with the unemployment rate unchanged at a 17-year low of 4.1 percent.

The U.S. has now increased the total number of jobs 87 consecutive months on a seasonally adjusted basis.  From the pre-recession peak in January 2008, total job loss was 8.697 million to the February 2010 trough.  Since then, the U.S. has created 17.647 million net new jobs.

Employment in the Leisure and Hospitality sector is an excellent proxy of the overall health index of the U.S. economy.  People do not spend money on vacations, cruises, entertainment spas or dinners out unless they feel good about the future economy.  My premise is that the U.S. economic outlook is healthy as long as the employment growth rate in Leisure and Hospitality exceeds that of the country overall.  Current Leisure and Hospitality job growth in the prior 12 months was 1.94 percent versus 1.41 percent for the total economy signaling strong consumer confidence.

Average hourly earnings, up 9 cents per hour in December 2017, increased 65 cents in the past 12-months, a gain of 2.5 percent.   Hourly earnings monthly since 2012 are shown in the following graph.

The following table was assembled by looking at job growth in total and by sector for December 2017 and the entire year.  It details the number and percentage of workers in each segment and the monthly average employment growth.

Other items in the December 2017 jobs report:

  • Number of Persons Unemployed for Less Than 5 Weeks declined by 18,000 from November to 2.350 million
  • Long-Term Unemployed (jobless for 27 or more weeks), now at 1.515 million, was down 78,000 from November 2017 and down 354,000 from a year ago
  • Civilian Labor Force Participation Rateis now 62.7 percent, unchanged from a year ago
  • Employment-Population Ratiois now 60.1 percent versus 59.8 percent a year ago – the bigger the better
  • Number of Persons Employed Part Time for Economic Reasons(also known as involuntary part-time workers) are individuals desiring full-time employment but either had their hours cut back or cannot find a full-time job), increased by 64,000 from November to December, but is down 639,000 from a year ago to 4.915 million
  • Marginally Attached to the Labor Force(not currently counted in the labor force, want and are available for work and had looked for a job in the prior 12 months) is down by 61,000 in the past year to 1.623 million.  Within that group, 469,000 were classified as Discouraged Workers – persons not currently looking for work because they believe there are no jobs available for them.  Discouraged Workers have shrunk by 48,000 in the past 12 months
  • Manufacturing added 25,000 net new jobs in December 2017 and 196,000 new jobs in the latest 12-months.  The segment accounts for 8.5 percent of all jobs in the U.S.
  • Health Care gained 31,400 jobs in December and added an average 25,000 each month in 2017.  Healthcare makes up 10.8 percent of all U.S. jobs
  • Construction added 30,000 jobs in December and 210,000 in the latest 12 months. Just one-in-five U.S. workers are in the construction industry (4.7 percent)
  • Leisure and Hospitality jobs increased by 29,000 jobs in December and were up 306,000 in the past 12-months
  • Food Service & Drinking Places (a segment under Leisure and Hospitality) makes up one-in-every 12 jobs in the U.S. (8.0 percent) and is by up 2.15 percent in the latest 12 months
  • Mining and Logging (which includes oil and gas) grew at 8.83 percent in 2017 but makes up just one out of every 200 jobs (0.5 percent)
  • Government represents 15.2 percent of all U.S. jobs, and while shrinking at the Federal and State levels, was up 0.53 percent at the Local level in 2017

To read the entire BLS release along with detailed tables click https://www.bls.gov/news.release/pdf/empsit.pdf

The U.S. economy continues to grow, but obviously is having a difficulty finding skilled-workers resulting in historical low unemployment rates and less than expected job creation.

Ted

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