December Labor Report
The Bureau of Labor Statistics released the December unemployment report on Jan. 6th, 2017. It was last unemployment report that will be released during president Obama's term of office. While the public directly credits or blames the president for the state of the economy, most economists know the president has little direct power over the economy. Even over the long term. Given that, a significant milestone was achieved when the Black unemployment rate fell below 8% for the first time since February 2001. More on this topic later.
The December report showed a small increase in US unemployment to 4.7% while the Labor Force Participation rate remained flat at 62.7%. Non Farm Payrolls (NFP) by 156,000 jobs including 63,000 in healthcare. Healthcare has added over half a million jobs this year (514K). Average wages increased by 10 cents after a surprise 2 cent drop in November. The number of unemployed workers increase by 120,000 to 7.5 million people. There were large increases in health care hiring (+63,000), trade and transportation and hospitality and leisure. Manufacturing was also up(+17,000).
NFPs continue moderate growth, increasing by 199,000 jobs on average each month since September 2010. September 2010, at the end of the recession, was the last payroll reduction.
All of the major indexes of labor employment and unemployment where unchanged. The indicators have not budged in roughly a year. We are nearing full employment and the true end of the recession. Now the focus will shift back to larger structural problems such as wage stagnation, income inequality and wealth inequality.
The Big Story
The big story is the Black unemployment rate fell to 7.8% in December. The last time the rate was below 8% was sixteen years ago (in February 2001). Damn. Black men have an unemployment rate of 7.6% while Black women have a rate of 6.7%. The Black teenage rate is 26% vs. 14% for whites.
The U-6 rate show continued improvement dropping to 9.2%. U-6 includes all unemployed, people working part time who want full time work, and marginally attached workers (basically everyone who is available to work)
The Black U-6 rate fell by a half of one percent to 12.3%. This rate captures the real unemployment rate among Blacks who want to work. The Black U-6 rate was as high as 24% in April 2010.
Here you can see a comparison between Black, White and Hispanic/Latino unemployment rates below.
The Business Survey showed moderate employment growth.
The healthcare sector was the big winner.
ADP reported 153,000 NFP jobs were created. The jobs were split among small businesses (+18K), medium sized businesses (+71K) and large businesses (+63K). According to ADP goods producing business shed -16K jobs while services hired 169K workers. Manufacturing lost -9K jobs.
Paychex small business jobs index was up slightly at 100.62 in December after 3 months of declines.