On the first Friday of most months we make a point of diving deeper in the employment report. While the number of jobs created and the raw unemployment rate are useful data, they're not the whole story. We look at all the data, even if the mainstream media doesn't.
With that as the backdrop, we waited a week before dissecting December's jobs report as we wanted to wait for one piece of information that's never posted the same day as the official report from the Department of Labor... wages. For whatever reason, it takes a few extra days to get those numbers. It's worth the wait though. As we've said more than once of late, with the nation at or near its maximum employment potential, from here the measure of "progress" will be rising wages, indicating more competition to get and keep workers.
We've got that data in-hand for December, and it's eye-opening. First though, let's start with the basics.
As you'll likely recall, last month's unemployment rate didn't budge from 4.1% on the addition of 148,000 jobs. That was less than expected by economists, but as was noted, it's difficult to create new 'net' jobs. The progress comes in the form of better jobs.
To that end, note that the underlying numbers used to create the official unemployment rate still look quite healthy, indicating actual job growth. The number of people with jobs reached 154.0 million, which would have been a record had the figure not spiked in September as part of the response to two major hurricanes taking aim at the United States. Conversely, the number of people officially or unofficially unemployed are both still near multi-year lows.
Yet, we've still not seen any real progress in the labor force participation rate, and the employment/population ratio seems to be leveling off after starting to reclaim historical norms.
We may have to concede that the en masse retirement of the baby boomers is the crux of this seemingly troubling data. The economy is doing just fine even with this many people out of the workforce altogether. Wages are doing fine too.
On that note...
Though hourly pay rates got 2017 started with a bang after tapering off in the latter part of 2016, December's slight uptick is encouraging. It's not yet a trend, but it's a start, suggesting employers have to be a bit more generous if they want to keep talent on board.
Were the number of people with jobs not rising and/or the number of people without jobs not falling not a reality, we might be able to dismiss December's increased paychecks as simple volatility. That's now what we've got though. In total, all the data points to one conclusion -- employment is on the right track, in step with strong economic expansion.
Another round of the same kind of progress for January (reported on the first Friday of February) would seal the deal, so to speak. We'll be on the lookout for that a month from now. For the sake of thinking and acting preemptively though, we'd have to give December's jobs report a B+ if not an A-.