On average, the job market slows after the holiday season
This article first appeared on SchiffGold.
November had been the weakest jobs report of the year until a meager 199k were announced for December. As shown below, over the last 18 months, only December 2020 was weaker. This was right when the Covid second wave was wreaking havoc and before vaccines became available to the public.
Figure 1: Change by sector
This next chart compares the current month with the trailing 12-month average. Every category is lagging the 12-month average by a wide margin except for Construction. A few key takeaways:
Figure 2: Current vs TTM
Similar to last month, Leisure and Hospitality remain low, possibly indicating a longer-term trend being established. The broader economy had 152.5M people employed as of Feb 2020 and now only has 148.95M. Leisure and Hospitality make up 1.2M of the total 3.55M job losses still outstanding. At the current rate, it would take nearly 2 years for the sector to recover just to pre-pandemic levels. Could some of the slowness be due to Omicron? Sure. But the virus seems to have a much smaller impact on the broader economy compared to previous waves, despite much higher infection rates.
The table below gives a much more detailed breakdown of the numbers and the entire labor force. Some key takeaways:
One other point to note, from 2000-2019 (excluding 2008), October-December is the strongest three-month stretch of the year. This is followed by January-March which is typically the slowest three-month stretch. If this trend holds true, then the numbers are going to get worse in the months ahead.
Monthly Average Change | Total % Change | ||||||||
Category | Total Employed | Current Month | 3 Months | 12 Months | 3 years | Current Month | 3 Months | 12 Months | 3 years |
Private Sector | |||||||||
Construction | 7,560 | 22 | 33.7 | 13.3 | 4.0 | 0.3% | 1.3% | 2.1% | 1.9% |
Education Health | 23,804 | 10 | 31.7 | 46.2 | -1.4 | 0.0% | 0.4% | 2.3% | -0.2% |
Financial | 8,919 | 8 | 17.7 | 12.1 | 7.0 | 0.1% | 0.6% | 1.6% | 2.8% |
Information | 2,795 | 0 | 4.3 | 11.3 | -1.7 | 0.0% | 0.5% | 4.9% | -2.2% |
Leisure Hospitality | 15,693 | 53 | 101.7 | 213.2 | -20.1 | 0.3% | 1.9% | 16.3% | -4.6% |
Manufacturing | 12,580 | 26 | 37.7 | 29.1 | -6.2 | 0.2% | 0.9% | 2.8% | -1.8% |
Mining and Logging | 656 | 6 | 4.0 | 4.9 | -2.4 | 0.9% | 1.8% | 9.0% | -13.1% |
Other Services | 5,807 | 13 | 22.0 | 28.2 | -1.2 | 0.2% | 1.1% | 5.8% | -0.7% |
Prof Business | 21,434 | 43 | 81.7 | 73.7 | 8.5 | 0.2% | 1.1% | 4.1% | 1.4% |
Trade Trans Utils | 27,795 | 30 | 64.0 | 67.6 | 3.8 | 0.1% | 0.7% | 2.9% | 0.5% |
Government | |||||||||
Government Federal | 2,880 | -2 | -0.7 | -1.0 | 1.9 | -0.1% | -0.1% | -0.4% | 2.4% |
Government Local | 13,996 | -10 | -20.7 | 30.2 | -14.6 | -0.1% | -0.4% | 2.6% | -3.8% |
Government State | 5,032 | 0 | -11.7 | 8.5 | -4.1 | 0.0% | -0.7% | 2.0% | -3.0% |
Total | |||||||||
All | 148,951 | 199 | 365.3 | 537.3 | -26.6 | 0.1% | 0.7% | 4.3% | -0.6% |
Values in 1,000s of workers. Data as of: Dec 2021. Total Employed = Entire size of the labor market. | |||||||||
This data is subject to revisions as new data becomes available. While the headline release gets a ton of market attention, the revisions get far less. The table below shows the impact of the revisions over different time periods. Please note this is as of the prior month since the most recent month has not seen any revisions. Important items to note:
These revisions are quite large by any standard. Over the last two decades, monthly job numbers come in around 100k which is about the size of the current revisions.
3 Month Compare | 12 Month Compare | 3 Year Compare | |||||||
Category | Current | As Of Published | Avg Month Diff | Current | As Of Published | Avg Month Diff | Current | As Of Published | Avg Month Diff |
Private Sector | |||||||||
Construction | 114 | 97 | 5.7 | 185 | 175 | 0.8 | 152 | 241 | -2.5 |
Education Health | 101 | 61 | 13.3 | 516 | 435 | 6.8 | 13 | 94 | -2.2 |
Financial | 57 | 36 | 7.0 | 155 | 122 | 2.8 | 254 | 212 | 1.2 |
Information | 17 | 40 | -7.7 | 145 | 135 | 0.8 | -58 | -100 | 1.2 |
Leisure Hospitality | 360 | 261 | 33.0 | 2,008 | 1,683 | 27.1 | -731 | -1,210 | 13.3 |
Manufacturing | 116 | 117 | -0.3 | 358 | 303 | 4.6 | -225 | -185 | -1.1 |
Mining and Logging | 7 | 6 | 0.3 | 53 | 57 | -0.3 | -86 | -53 | -0.9 |
Other Services | 49 | 27 | 7.3 | 309 | 250 | 4.9 | -48 | -14 | -0.9 |
Prof Business | 313 | 250 | 21.0 | 1,000 | 799 | 16.8 | 292 | 292 | 0.0 |
Trade Trans Utils | 274 | 261 | 4.3 | 782 | 671 | 9.2 | 78 | 197 | -3.3 |
Government | |||||||||
Government Federal | -2 | -1 | -0.3 | -6 | -1 | -0.4 | 73 | 68 | 0.1 |
Government Local | -85 | -164 | 26.3 | 337 | 312 | 2.1 | -498 | -609 | 3.1 |
Government State | -45 | -56 | 3.7 | 101 | 51 | 4.2 | -132 | -331 | 5.5 |
Total | |||||||||
All | 1,276 | 935 | 113.7 | 5,943 | 4,992 | 79.2 | -916 | -1,398 | 13.4 |
Values in 1,000s of workers. Because this data is focused on revisions, it is as of the month prior: Nov 2021. "Current" shows the change in employment after revisions. "As Of Published" shows change in employment at time of release. "Avg Month Diff" shows the average monthly change from the revisions. | |||||||||
The chart below shows data going back to 1955. As the labor force has grown in total aggregate numbers, the recessions along the way have caused dips in the general trend. But the trend is still clearly upward.
The Covid recession can be seen as the greatest job market loss. The chart also shows how much work the labor market still requires to regain the employment level seen prior to Covid (top far right draw down). As mentioned above, the job market had 152.5M people. That number currently sits at 149M. The job market is still 3.5M people short. At 200k a month, it would take another 18 months for the recovery to reach pre-pandemic levels.
If the job market slows, then this will be even longer. Another factor is where the job market would have been without Covid. Currently much higher than the 152.5M pre-Covid. This means the job market is still way behind.
In the latest period, the unemployment rate fell again from 4.2% to 3.9% (it was 3.5% pre-Covid). This occurred as labor force participation stayed flat at 61.9% (Figure 4).
Figure 3: Historical Labor Market
The distribution of the workforce has changes significantly over the last 65+ years. For example, in 1955, manufacturing accounted for 30% of jobs vs 8.4% today. Education/Health Care has tripled from 5% to 16%.
Although the unemployment rate has been sharply falling over the last year (chart above), the labor force participation (61.9%) is still well below pre-pandemic levels (63.4%) and much lower than the 66% pre financial crisis. The current trend has flat-lined.
Figure 4: Labor Market Distribution
Gold and silver have been on a bumpy ride recently. Into year end, the precious metals market looked strong. It’s possible it would have been stronger without the Comex House accounts unloading inventory from their physical stash. Regardless, since Dec 31 the market has pulled back. $1800 continues to be very challenging resistance for the yellow metal, falling below the psychological milestone in the wake of “hawkish” Fed minutes.
How hawkish can the Fed be though? With the debt still exploding and a job market that seems to be weakening, how can the Fed exit easy monetary policy without imploding the entire economy? In short, it cannot. Inflation will be allowed to run hot and the Fed will turn down the hawkish talk. “Hawkish” actions may never even materialize. Gold and silver offer the best protection against a Fed and Treasury working together to increase spending, debt, and money printing far into the future.
Data Source: https://fred.stlouisfed.org/series/PAYEMS and also series CIVPART
Data Updated: Monthly on first Friday of the month
Last Updated: Dec 2021
Interactive charts and graphs can always be found on the Exploring Finance dashboard: https://exploringfinance.shinyapps.io/USDebt/