Nonfarm Payrolls Rise 256,000 In December; Unemployment Decreases -

Nonfarm Payrolls Rise 256,000 In December; Unemployment Decreases

Jan 10, 2025Jeremy ParkinsonFinance0

Nonfarm payroll and employment data from the BLS, chart by Mish
Jobs vs EmploymentFrom September 2020 through early 2022, nonfarm payroll job gains and full time employment changes tracked together.Starting around March of 2022, a divergence between employment and jobs became very noticeable, and I have been discussing the divergence since then.Job Stats vs One Year Ago

Nonfarm Payrolls: +2,232,000

Employment: +537,000

Full Time Employment: +434,000

The economy is adding jobs, but employment growth is part time.Job Stats vs 3 Years Ago

Nonfarm Payrolls: +8,166,000

Employment: +2,232,000

Full Time Employment: +937,000

Over 8.1 million nonfarm payrolls but full-time employment is only 937,000.Job Report Details

Nonfarm Payroll: +256000 to 159,536,000 – Establishment Survey

Civilian Non-institutional Population: +175,000 to 269,738,000

Civilian Labor Force:+243,000 to 168,547,000 – Household Survey

Participation Rate: +0.0 to 62.5% – Household Survey

Employment: +478,000 to 161,661,000 – Household Survey

Unemployment: -235,000 to 6,886,000 – Household Survey

Baseline Unemployment Rate: -0.1 to 4.1% – Household Survey

Not in Labor Force: -68,000 to 101,091 – Household Survey

U-6 unemployment: -0.2 to 7.5% – Household Survey

Nonfarm Payrolls Change by Sector 2024 vs 2023 Nonfarm Payrolls Change in December

Private Education and Health Services: +80,000

Government: +33,000

Retail trade: +43,000

Construction: 8,000

Manufacturing: -13,000

Wholesale Trade: -4,000

Retail Trade: +43,000

Financial Activities: +13,000

Professional and Business Services: +28,000

Leisure and Hospitality: +43,000

Education, Health Services, and Government added 113,000 jobs in December. I suspect retail trade was a seasonal anomaly.Monthly Change in Nonfarm Payrolls Monthly Revisions

The change in total nonfarm payroll employment for October was revised up by 7,000, from +36,000 to +43,000.

The change for November was revised down by 15,000, from +227,000 to+212,000.

With these revisions, employment in October and November combined is 8,000 lower than previously reported.

Part-Time Jobs

Involuntary Part-Time Work: -111,000 to 4,358,000

Voluntary Part-Time Work: +134,000 to 22,514,000

Total Full-Time Work: +87,000 to 133,510,000

Total Part-Time Work: +247,000 to 27,918,000

Multiple Job Holders: -99,000 to 8,478,000

The above numbers never total correctly due to the way the BLS makes seasonal adjustments. I list them as reported.Note that multiple job holders add to nonfarm payrolls but not the number of employed.Hours and WagesThis data is frequently revised.

Average weekly hours of all private employees was flat at 34.3 hours.

Average weekly hours of all private service-providing employees was flat at 33.2 hours.

Average weekly hours of manufacturers dropped 0.1 hour to 40.0 hours.

An overall decline or rise of a tenth of an hour does not sound line much, but with employment over 160 million, it’s more significant than it appears at first glance.Hourly EarningsThis data is also frequently revised. Here are the numbers as reported this month.Average Hourly Earnings of All Nonfarm Workers rose $0.10 to $35.69. A year ago the average wage was $34.34. That’s a gain of 3.9%.Average hourly earnings of Production and Nonsupervisory Workers rose $0.06 to $30.62. A year ago the average wage was $29.51. That’s a gain of 3.8%.Year-over-year gains have been trending lower.Unemployment RateThe unemployment rate has been in a holding patter of 4.1 percent or 4.3 percent for six consecutive months.Alternative Measures of Unemployment Table A-15 is where one can find a better approximation of what the unemployment rate really is.

The official unemployment rate is 4.1 percent.

U-6 is much higher at 7.5 percent.

Both numbers would be way higher still, were it not for millions dropping out of the labor force over the past few years.Some of those dropping out of the labor force retired because they wanted to retire. Some dropped out over Covid fears and never returned. Still others took advantage of a strong stock market and retired early.The rest is disability fraud, forced retirement (need for Social Security income), and discouraged workers.Birth Death ModelStarting January 2014, I dropped the Birth/Death Model charts from this report.The birth-death model pertains to the birth and death of corporations not individuals except by implication.For those who follow the numbers, I retain this caution: Do not subtract the reported Birth-Death number from the reported headline number. That approach is statistically invalid.Birth-Death Methodology ExplainedI gave a detailed explanation of the model and why the hype is wrong in my June 8, 2024 post How Much Did the BLS Birth-Death Adjustment Pad the May Jobs Report?I repeat, do not subtract the birth-death number from the headline number. That’s flawed.However, it is now clear that the BLS is too optimistic about the number of jobs they believe are being created by the net creation of new businesses.A Breakdown, by Sector, of the Negative 818,000 BLS Job RevisionsOn August 22, 2024 I gave A Breakdown, by Sector, of the Negative 818,000 BLS Job RevisionsThose negative revisions are a direct result of the BLS Birth-Death model gone haywire.Quarterly QCEW Data Provides More Evidence of BLS Jobs OverstatementOn November 20, I commented Quarterly QCEW Data Provides More Evidence of BLS Jobs Overstatement

Hard evidence from QCEW report suggests more negative revisions coming for BLS nonfarm payroll report.

Household Survey vs. Payroll Survey

The payroll survey (sometimes called the establishment survey) is the headline jobs number. It is based on employer reporting.

The household survey is a phone survey conducted by the BLS. It measures employment, unemployment and other factors.

If you work one hour, you are employed. If you don’t have a job and fail to look for one, you are not considered unemployed, rather, you drop out of the labor force.Looking for job openings on Jooble or Monster or in the want ads does not count as “looking for a job”. You need an actual interview or send out a resume.These distortions artificially lower the unemployment rate, artificially boost full-time employment, and artificially increase the payroll jobs report every month.The BLS payroll reports smack of oversampling large employers and undersampling small employers where jobs have been trending lower.SynopsisThis was a stronger than expected report but full-time employment has been weak for three consecutive years.Nonfarm Payrolls are up +8,166,000 from three years ago, but employment is only up +2,232,000. Full-time employment is only up, 937,000.Since the peak in June of 2023, full-time employment is down by 258,000.The QCEW reports continually show that jobs are overstated. The strength we do see is suspect.More By This Author:Biggest Drop In Revolving Consumer Credit Since The Great Recession Bonds Hammered: Is It Fed Policy, Trump Policy, Or Both? How Much Revenue Can Trump Realistically Bring in From Tariffs?