Friday, January 05, 2007

Employment Report

Nonfarm employment increased by 167,000 in December, and the unemployment
rate was unchanged at 4.5 percent, the Bureau of Labor Statistics of the U.S.
Department of Labor reported today. Job gains occurred in several service-
providing industries, including professional and business services, health care,
and food services. Average hourly earnings rose by 8 cents, or 0.5 percent, in

I guess this means that ADP, even while processing a slew of paychecks for corporate America, has no more clue about the monthly job figures than anyone else. On Wednesday, ADP predicted a decline in December payrolls of 40,000. Maybe ADP needs some new customers as theirs don't seem to be doing very well.

Today's report has good news and not so good news. Overall employment was up due to the increase in service sector jobs which more than offset the continued decline in manufacturing jobs (down 12,000). Construction declined only 3000 after losses in October and November of 53,000. Maybe the housing market really is starting to bottom out. Or maybe warm weather and seasonal adjustments are making things look better than they actually are.

The one piece of bad news, at least if you're worried about inflation, was the continued rise in average hourly earnings to $17.04 (or 0.5%). Average hourly earnings were up 4.2% for the year which has to make the Fed uneasy and explains the stock market selloff this morning. The market has been anticipating a rate cut and this number certainly reduces the chances. By the way, with average hourly earnings at $17.04 why are the Democrats so hot to raise the minimum wage? Another topic for another time....

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