U.S. Jobs: Mixed Messages from December Report
It looks like 2021 went out with a whimper rather than a bang, with only 199,000 jobs added for the month. The consensus forecast hovered around 400,000 earlier in the week, but was neatly bisected by the actual numbers.
Even so, a bump of 102,000 jobs for October (from 546,000 to 648,000) and 39,000 for November (from 210,000 to 249,000) helped soothe the shock of over-expecting and underachieving. Unemployment also fell below 4 percent for the first time since January 2020, despite the somewhat disappointing December jobs added number.
What does it all mean? The economy continues to improve, but at a slower pace. As The Washington Post observed in its January 7 story, "[M]any economists � said they felt the report was stronger than it top-line figure" seems to suggest. I agree with this assessment, and think there's more strength in the jobs market than revised November numbers (249,000) and initial December numbers (199,000) indicate.
Initial reports for November were just over the 200,000 mark themselves, and gained some juice in this month's report. I'm almost willing to bet that the same will be true for December's numbers when the January report hits on Feb. 4. We shall see ...
Where Growth Happened – Such as It Was
According to the latest Employment Situation Summary from the U.S. Bureau of Labor Statistics, job growth averaged 537,000 per month for all of 2021. December's number is less than half that amount. Overall, employment by the numbers is down by 1.6 million jobs (2.3 percent) from levels before the pandemic struck in March of 2020.
Indeed, employment has risen by a whopping 18.8 million jobs since April 2020 when unemployment spiked massively (more than 20 million jobs lost). We've gained a LOT more ground than we have to make up, that's for sure.
Here's a summary of where jobs were added or lost in December:
Leisure and hospitality gained 53,000 jobs. It's up by 2.6 million jobs for 2021, but still down by 1.2 million since February 2020.
Professional and business services added 43,000 jobs, with 10,000 in computer systems design and related services, 9,000 in architectural and engineering services, and 6,000 in scientific research and development services. Overall this sector is down by 35,000 jobs since February 2020 and has nearly achieved pre-pandemic parity.
Manufacturing grew by 26,000 jobs, mostly in durable goods industries, of which 8,000 jobs added in machinery resulted from workers returning from a strike. Manufacturing remains down by 219,000 jobs vis-�-vis February 2020.
Construction added 22,000 jobs, down slightly from a 30,000 monthly average over the prior three-month period. Of that number, specialty trade contractors were up 13,000 jobs, heavy and civil engineering construction by 10,000 jobs. This sector is down by 88,000 jobs from February 2020 levels.
Transportation and warehousing gained 19,000 jobs, of which support activities account for 7,000, air transportation 6,000, and warehousing and storage 5,000.
Wholesale trade added 14,000 jobs (remains down by 129,000 compared to February 2020), and mining added 7,000 jobs (down by 81,000 from its January 2019 peak).
Other sectors were relatively flat (the report calls out no specific job losses), with retail trade, information, financial activities, healthcare, other services and government little changed.
Thus, what growth occurred was fairly widespread across about half of the sectors that the U.S. BLS team tracks, in a range of 53,000 to 7,000 jobs (average for all sectors that reported growth: about 33,000, with the lowest at -24, and the highest at +20).
Other Voices and Perspectives
NPR reports that employers kicked off December with a near-peak value for job openings of 10.6 million. They also note that job posting counts on Indeed "held steady through the end of the month." They tie the drop in demand for workers to the recent COVID surge, but do not single out Omicron just yet.
They also comment on tremendous churn in the workforce — which one source jokingly labels "the Great Job Hop" — as workers leave old jobs to find better-paying or more attractive new ones.
The Washington Post takes a deliberately upbeat view of the latest report, with once source quoted saying, "We have a weak headline number, but the details were much better. The job market was still good at the end of 2021." They also comment that "Wages also grew markedly in 2021 as record numbers of Americans have quit their jobs to find alternatives with better pay and benefits."
A chart also points out that 4.5 percent job growth in 2021 is the highest on record in the United States since 1978 (when it hit an even-higher 5 percent).
What to Expect for 2022
With COVID continuing to surge, but most states avoiding shutdowns and strict restrictions, it's hard to guess which way employment will turn in January and beyond. It's not hard to see growth and rising infection rates counterbalancing one another. Most labor market watchers are choosing an optimistic view of 2021 based on job growth across the entire year.
The last two months do give cause for concern, and could presage a slowdown. As usual, of course, only time will tell. Please check in early next month, as I absorb and digest the next thrilling Employment Situation Summary.