Wow, that’s a pretty ugly chart above.
Here are the details, via BLS:
"The unemployment rate rose to 5.0 percent in December, while nonfarm payroll employment was essentially unchanged (+18,000), the Bureau of Labor Statistics of
the U.S. Department of Labor reported today.
Job growth in several service-providing industries, including professional and technical services, health care, and
food services, was largely offset by job losses in construction and manufacturing.
Average hourly earnings rose by 7 cents, or 0.4 percent."
So, December NF Payrolls rose much less than
expected, up a marginal 18,000 – or as BLS described it, largely unchanged – versus a consensus of 70,000. This was the lowest reading since August 2003. Construction job losses are now finding their way into the data, regardless of the aforementioned Birth Death adjustment.
Unemployment rate rose
to 5.0%, the highest in 26 months. As we have noted repeatedly in past months, to keep up with population growth requires ~150k new jobs to be created each month. Given the number of months we have seen below that level, an uptick in unemployment was inevitable.
The spin coming from the usual sources will be that this poor showing was the result of the August credit crunch, and is therefore likely to be a temporary phenomena.
These same folks will point to the increasing odds of a 50 bps cut at the January meeting. Those futures have risen to 44% from 36% yesterday. Unfortunately, the Fed finds itself somewhat hamstrung by elevated inflation, $100 Oil and $850 Gold as
signs proof of inflation.
Coming on top of the slowing Housing market, weak income levels, ISM manufacturing index, and auto sales, this is further evidence to the building thesis that a recession is increasingly likely.
Employment Situation Summary
BLS, DECEMBER 2007
Fed’s Inflation Fears Might Trump
Calls for Another Big Rate Cut Monetary-Policy Makers
Appear to Have Less Room To Maneuver Than in Past
WSJ, January 4, 2008; Page A3