Jobs data

December payrolls declined by 140k vs the estimate of up 50k but this was mostly offset by an upward revision of 135k to the two prior months. The private sector shed 95k jobs vs the estimate of up 25k but November alone was revised up by 73k. The household survey said 21k jobs were added and when combined with a similar rise in the labor force, the unemployment rate held at 6.7%. The all in U6 rate fell 3 tenths to 11.7%. Within the household survey, and reflecting the selective shutdowns, it was people with less than a college degree or some college/associate degree that lost jobs.

The participation rate along with the employment ratio each were unchanged m/o/m.

The decline in jobs was all in the service sector and pretty much ALL driven by leisure and hospitality which lost 498k jobs. Education/health lost 31k and the government shed jobs too at the local and state level. Construction and manufacturing both saw good job growth with the former adding 51k and the latter 38k. Retail also added a bunch of jobs for the holiday, adding 121k jobs. Temp jobs grew by 68k.

Those discouraged workers not in the labor force rose again and the duration of unemployment 27 weeks and over was higher as well (considered longer term unemployment). There is now a record amount of people not in the labor force and a rise of them m/o/m that want a job.

Average hourly earnings really surprised to the upside with an .8% m/o/m increase, well above the estimate of up .2% and the y/o/y gain was 5.1%. A large part of this though is definitely mix where many leisure and hospitality jobs were lost because of another round of shutdowns and they have lower wages which in turn raises the ‘average’ for the rest. With hours worked down .1 to 34.7, average weekly earnings rose by .5% m/o/m and 6.3% y/o/y.

Bottom line, as seen in the numbers, the decline in jobs hiring was pretty much all in the areas of the economy that were shutdown again in December, aka leisure/hospitality and we can thus give it a pass with the vaccine rollout now underway, however slow. The 10 yr yield was 1.09% before the number came out and is right now at 1.09%. The dollar though is weaker post number and stocks are just focused on momentum ahead of another Trillion dollars of money likely to be spent out of DC.