I think we can call this one unexpected. While the precursor reports suggested further weakening in the workforce participation rate, they also indicated a moderately decent number of jobs added. That’s not the case from the BLS, where the U-3 jobless rate dropped to 6.7% but only 74,000 jobs were added in December:RELATED: ABC’s Karl: What does the White House have to say for itself over a jobs report that is “barely treading water”?
The unemployment rate declined from 7.0 percent to 6.7 percent in December, while total nonfarm payroll employment edged up (+74,000), the U.S. Bureau of Labor Statistics reported today. Employment rose in retail trade and wholesale trade but was down in information.The number of unemployed persons declined by 490,000 to 10.4 million in December, and the unemployment rate declined by 0.3 percentage point to 6.7 percent. Over the year, the number of unemployed persons and the unemployment rate were down by 1.9 million and 1.2 percentage points, respectively. (See table A-1.)Among the major worker groups, the unemployment rates for adult men (6.3 percent) and whites (5.9 percent) declined in December. The rates for adult women (6.0 percent), teenagers (20.2 percent), blacks (11.9 percent), and Hispanics (8.3 percent) showed little change. The jobless rate for Asians was 4.1 percent (not seasonally adjusted), down by 2.5 percentage points over the year. (See tables A-1, A-2, and A-3.)Among the unemployed, the number of job losers and persons who completed temporary jobs decreased by 365,000 in December to 5.4 million. The number of long-term unemployed (those jobless for 27 weeks or more), at 3.9 million, showed little change; these individuals accounted for 37.7 percent of the unemployed. The number of long-term unemployed has declined by 894,000 over the year. (See tables A-11 and A-12.)The civilian labor force participation rate declined by 0.2 percentage point to 62.8 percent in December, offsetting a change of the same magnitude in November. In December, the employment-population ratio was unchanged at 58.6 percent. The labor force participation rate declined by 0.8 percentage point over the year, while the employment-population ratio was unchanged. (See table A-1.)The worst news comes in the workforce numbers. Those not in the workforce increased by 525,000 in December (91.808 million), after a one-time drop in the figure for November (91.283M from 91.756M in October). That’s a big exodus of people from the workforce, dwarfing the meager number of jobs added in the economy. Part-time work remained essentially constant at 7.8 million, so the exodus points to an ugly, ugly trend.
Not surprisingly, that lead to a decline in the workforce participation rate, back down to 62.8%. That matches the 36-year low hit in October, which is one reason why the unhinged U-3 continues to drop. The workforce number acts as the denominator for U-3, which means that the result will “improve” as the workforce declines. The U-6 metric, which considers more of those who are only marginally attached to the workforce, remains at 13.1%.
Reuters tries to pass this off on the weather:
U.S. employers hired the fewest workers in almost three years in December, but the setback was likely to be temporary amid signs that cold weather conditions might have had an impact.Nonfarm payrolls rose only 74,000 last month, the smallest increase since January 2011, and the unemployment rate fell 0.3 percentage point to 6.7 percent, the Labor Department said on Friday. The unemployment rate was the lowest since October 2008 and in part reflected people leaving the labor force.The step back in hiring is at odds with other employment indicators that have painted an upbeat picture of the jobs market. The data showed that 38,000 more jobs were added in November than previously reported.Construction employment fell for the first time since May and leisure and hospitality payrolls rose marginally, suggesting that cold weather in some parts of the country had held back hiring. There were also declines in government employment.Nonsense. This data is seasonally adjusted, and December wasn’t spectacularly cold. The polar vortex hit well after the new year (and may make a dent in January’s numbers). This looks like an excuse for being blindsided by a bad report, because Reuters’ own economists predicted gains of 196,000 for December.