Here Is The Main Reason For Today’s Blockbuster Jobs Report
Following a disastrous ADP print two days ago, which showed that the US economy added just the second fewest number of private payrolls since March 2010, and a sellside “whisper” number that was about half the consensus expectation of 183K, moments ago the BLS stunned markets and delighted the administration with a blockbuster jobs report, according to which the US economy added 266K jobs, the biggest monthly increase since January, and leading to a near record divergence with what ADP indicated.
To be sure, peaking behind the headlines revealed some questionable data, like only an 83K increase in employment according to the Household survey, a 7K drop in mining jobs, a 4K decline in wholesale trade, a stagnant construction sector, lot of seasonal hiring, a catch up in census worker hires, and so on.
Warts aside, many are confused what was behind the surprise upside print, and how the payrolls print came 29K jobs more than the highest forecast among 78 economists. The simple answer: a surge in manufacturing workers. As shown in the chart below, 54K manufacturing workers were added in November, the most in over two decades, or since 1998, as a result of about 41K GM striking workers returning to their jobs. That said, the November surge was an offset to the 43K slide in October, so on net, the print was largely a wash between the two months.
So besides the one-time surge in manufacturing workers, where else did the jobs come from? Well, as the chart below shows, excluding a drop of 7K miners and 4.3K wholesale traders, every single job category was positive in November, as follows:
- As has been the case for much of the past decade, in November the biggest job gains came from health care, which added 45,000 jobs, following little employment change in October (+12,000). The November job gains occurred in ambulatory health care services (+34,000) and in hospitals (+10,000).
- Employment in professional and technical services increased by 31,000 in November; this included 4.8K new temp jobs.
- As noted above, manufacturing employment rose by 54,000 in November, following a decline of 43,000 in the prior month. Within manufacturing, employment in motor vehicles and parts was up by 41,000 in November, reflecting the return of GM workers who were on strike in October.
- In November, employment in leisure and hospitality continued to trend up (+45,000).
- Employment in transportation and warehousing continued on an upward trend in November (+16,000). Within the industry, job gains occurred in warehousing and storage (+8,000) and in couriers and messengers (+5,000).
- Financial activities employment also continued to trend up in November (+13,000), with a gain of 7,000 in credit intermediation and related activities.
- Mining lost jobs in November (-7,000), largely in support activities for mining (-6,000). Mining employment is down by 19,000 since a recent peak in May.
- In November, employment in retail trade was about unchanged (+2,000). Within the industry, employment rose in general merchandise stores (+22,000) and in motor vehicle and parts dealers (+8,000), while clothing and clothing accessories stores lost jobs (-18,000).
- Employment in other major industries–including construction, wholesale trade, information, and government–showed little change over the month.
Or, as BofA shows it, here is the jobs heatmap:
… and here is a summary of average earnings:
Yet for all the attention that manufacturing jobs are getting this month, expect this series to return to its boring monotone of hugging the flat line, if modestly declining. The one series that does matter? Education and Health, because as America gets older and more frail, the one job that will be most in need is for more people to take care of the country’s wealthy baby boomers. Sure enough, if one excludes this category, US jobs have been declining in the past year as the following ECRI chart shows.
Finally, lets not forget the “food services and drinking places” jobs: the relentless dynamo driving the US jobs market. Since February 2010, there have been just 5 months in 117 in which the number of waiters and bartenders in the US has posted a monthly decline, and November was no different.
Fri, 12/06/2019 – 10:17