Friday, December 7, 2007

Employment Data Slightly Better Than Expected

Though the number of new jobs created in November slipped by 75k from the prior month, they were still stronger than expected at 94k (consensus 80k). This is in line with the 93k pace of monthly job creation now shown for July and August of this year, and also the six month average of 94k monthly growth. The household survey showed an increase of 696k new jobs, pushing up the employment ratio to 63% from 62.7% in October. The participation rate rose to 66.1% from 65.9% the prior month. Revisions of prior months data erased 48k in previously announce job gains.

In addition, the unemployment rate held steady at 4.7% for the third month in a row, rather than creeping up to 4.8% as expected. The unemployment rate had reached a five year low of 4.4% last March. An increase in the labor force of 297k increased the augmented unemployment rate to 7.4% from last month's recent low of 7.3%.

The workweek held steady at 33.8 hours while average hourly and weekly earnings rose at their fastest pace since June, growing +.5% MoM, or eight cents. Over the past year, earnings have risen 3.8% on both an hourly and weekly basis. The manufacturing workweek extended to 41.3 hours from a low last month of 41.2 hours, with overtime holding steady for the fourth month at 4.1 hours. In aggregate, hours worked rose +.1% MoM. This data will not raise any inflation concerns with the Fed.

As has been the trend, most of the new jobs were created in the service sector (+127k vs 192k the prior month). Other areas showing gains of at least 30k new jobs last month include trade and transport, business services, and the government. Four areas saw job shedding - goods producing (-33k), construction (-24k), financial (-20k), and manufacturing (-11k). Temporary help grew 11k versus 28k in October. Retailers added 24k new jobs, for the first increase in this category in four months. Factory payrolls fell -11k, supporting signs of weakening manufacturing data.

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