Jobs Report - Part 1 - The real unemployment rate – December

Part 1 - The real unemployment rate – December  

Bottom Line: It's always that case that there's a lot more to a monthly employment picture than the jobs added or lost and base reported unemployment rate. There’s a lot more to the employment report than just a couple of headline numbers that you heard about. Especially against the backdrop of trade and economic concerns that'd been freaking the markets out of late. But let’s start with the headline numbers before digging deeper. 

  • Headline unemployment rate remained 3.7% - lowest since 1969!   
  • 155,000 jobs added in November 
  • Negative revisions totaling –12,000 jobs, so the net number was actually just +143k 

Top industries for hiring:             

  • #1(tie) Professional and business services   
  • #1(tie) Healthcare    
  • #3 Manufacturing  

Manufacturing adding another 27k jobs for the month is a strong sign that the underpinning of the economy remains strong. About 70% of the US economy is consumer spending and if that begins to dry up, one of the first industries to feel it is the manufacturing sector. That manufacturing is still strong and ramping up hiring is a major tell in this report.  

Now for the real unemployment rate once underemployed and long-term unemployed people are accounted for:             

  • Actual: 7.6% down from 8% yoy   

That’s a slight increase over the prior month due to an increase in the number of underemployed and marginally attached people in the working.  

Other key takeaways:               

1. When the long-term unemployed, marginally attached and underemployed are factored in - the real unemployment rate is back to being more than double the base rate 

2. The forgotten folks include 1.3 million are long-term unemployed, 4.8 million are underemployed & 1.7 million are marginally attached to the workforce.   

3. The labor participation rate improved to 62.9%     

The good news is that those who’re long-term unemployed are down to the lowest level since at least the mid-2000's at 1.3 million. The not-so-good news is that we went backwards with those underemployed & marginally attached. 

Here’s a little perspective. Disappointing? Yes. Indication of bigger problems? No. We still have the lowest base unemployment rate in 49 years and lowest real unemployment rate in about 17 years. But there’s still clearly work to do to continue to make progress with those that are missed by the base employment rate.

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