The U.S. jobs report is not as weak as looks for the second month in a row. Here’s why

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The US added only 199,000 new jobs in December and just 249,000 in November, when it should have created twice that amount. Bad sign for the economy? not so fast.

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The employment gains in the last two months are undoubtedly weak in comparison to them. The US lost more than 20 million jobs early in the pandemic and the number of people working has still not returned to pre-crisis levels.

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However, a separate part of the employment report – which usually receives less attention – suggests that recruitment has been much stronger over the past few months than the headline numbers prized by the Wall Street DJIA,
+0.27%
and Washington.

A survey of households shows that 651,000 people got jobs in December and 11 lakh in November. That’s 1.74 million jobs – nearly four times the combined headline numbers of the past two months.

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Headline numbers are derived from surveys of business establishments that are much more reliable over time. The survey questions about 700,000 workplaces each month about how many people are employed.

The household survey questions only 60,000 households every month and is highly prone to error.

“The labor market continues to present us with some confusing signs as we approach 2021,” said Nick Bunker, economist research director at Indeed Hiring Lab.

Yet household surveys sometimes turn out to be faster turning points in the economy or labor market than surveys of occupations, the economists note. May be the same thing is happening now.

“Historically, household surveys have been more volatile and therefore less reliable,” said David Wagner, portfolio manager at Aptus Capital Advisors. “But if people are indeed shifting from employment to gig work – as many anecdotes suggest – then the household survey may actually offer a more accurate picture of the labor market because it captures all workers, not just Only on payroll.”

Steve Blitz, chief economist at TS Lombard, also said household surveys could be “more representative of work in a post-Covid world”. More people are self-employed, he pointed out, and there aren’t as many businesses as usual answering government surveys.

Business surveys show late in itself that job growth is stronger than it seems. The government has sharply increased monthly employment gains since last summer because of late responses from companies it surveyed.

Take October. The government initially said 531,000 new jobs were created in the month. The estimate was then raised to 546,000 and finally to 648,000.

The Bureau of Labor Statistics has acknowledged that its ability to calculate new jobs has been affected by the pandemic. It had to rely more on web-based responses than before the crisis.

To be sure, some of the reduction in hiring reflects an ongoing labor shortage.

Millions of people retired early in the pandemic. Afraid to go back to work. And frequent disruptions to school and daycare centers have made it harder for parents to keep full-time jobs, especially for low-income Americans.

Economists say hiring will eventually accelerate, especially with wages rising at the fastest pace in decades. Yet the labor shortage may persist for a long time.

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