Payroll Employment Up 103,000; Unemployment Rate Down to 9.4%

The Bureau of Labor Statistics reported that payroll employment rose by 103,000 in December. This follows an upwardly revised gain of 71,000 in November (previously reported to be 39,000). Private sector employment rose by 113,000, bringing the growth rate back in line with the trend of the past six months prior to a fallback in November. This number contrasts significantly with the earlier reported ADP estimate released on Wednesday showing growth of 297,000 jobs. It is possible that seasonal adjustment factors dealing with holiday employment contributed to this large discrepancy.

Payrolls must expand somewhere around 100,000 to 150,000 per month simply to absorb new entrants to the labor market. As such, the private sector employment growth trend over most of the past year is just barely absorbing population growth. Payrolls will have to start growing at a brisker pace in order to bring down the unemployment rate significantly.

ABA Chief Economist, Jim Chessen stated: “Today’s employment report can be looked at as a glass half full. It is encouraging that the economy continues to add jobs, showing the labor market is improving. However, it is disappointing that a higher rate of job growth is not yet occurring, which is needed to lower the unemployment rate.”

In December, the unemployment rate did fall to 9.4% from 9.8%. However, this was almost entirely due to about 290,000 workers leaving the labor force, not due to new job growth. The labor force participation rate slid to 64.3%, the lowest rate of the cycle thus far. Many workers are likely continuing to feel discouraged and have given up looking for work.

	Dec	Nov	Oct	Sep	Aug	Jul
Payroll Change (000s)	103	71	210	-24	-1	-66
Goods Producing	-2	-5	10	-10	17	37
Services	105	76	200	-14	-18	-103
Private Sector	113	79	193	112	143	117
Unemployment Rate	9.4	9.8	9.6	9.6	9.6	9.5
Labor Force Particip. R.	64.3	64.5	64.5	64.7	64.7	64.6