December Employment Report: Smallest Nonfarm Payroll Gain Since 2003

by: Tim Iacono January 07, 2008    

Tim Iacono

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The Bureau of Labor Statistics released the December employment report a short time ago. Nonfarm payrolls rose by 18,000, the smallest gain since 2003, and the unemployment rate rose from 4.7 to 5.0 percent.

Job gains in several service industry categories such as professional and business services along with education and health services were largely offset by job losses in construction and manufacturing.

Private sector payrolls (excluding the 31,000 new government jobs) fell by 13,000, the first decline since June of 2003.

Employment in retail trade (within the trade, transportation, and utilities category) fell by 24,300 led by a 7,900 drop at clothing and clothing accessory stores.

Within the construction category, job losses were spread across all five subcategories - losses were seen for both residential and nonresidential construction as well as for builders and for smaller specialty trade contractors.

With the prospect of smaller employment gains or outright job losses at the state and local government level due to reduced tax revenues, the most recent trend in private sector employment bodes ill for the labor market in 2008.

After last week's labor report and the recent update to the S&P Case-Shiller Home Price Index, it seemed only natural to put the two of them on the same chart. Here it is:


It's funny to think that at the depths of the last recession, the 10-city home price index was still rising at almost ten percent.

Recall that home prices haven't been counted in the consumer price index since about 1983. If they had been included in the inflation statistics, it's likely that the Fed wouldn't have pushed interest rates so low and kept them there for so long, engineering such a strong recovery in tje economy and the labor market.

Who would have thought that home price increases of between 10 and 20 percent a year would prove to be unsustainable?

We all had jobs and our houses were making us all rich.

Can't we just go back to 2004 or 2005?

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This article has 1 comment:

  •  
    Jan 07 05:47 PM
    Despite positve net-job creation, Real Wages follow the (Un)Employment Rate.

    The rise in the Unemployment rate is recessionary
    and the y/y % change in Real Wages is approaching zero.
    Reply | Link to Comment
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