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The U.S. jobs report for November ahowed a less than expected 155,000 new NFP jobs following revised October non farm payrolls of 237,000 new jobs with unemployment to stay at 48 year lows. We are still digesting the effect trade wars on jobs with tensions affecting employers.



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Of note following Federal Reserve President Powell's speech last week and the recent G 20 meeting will be wages. In October American wages hit their highest levels in a decade at 3.1% with this trend is expected to continue in November. October's strong rebound in jobs growth in October to 250,000 came after a hurricane-induced slowdown to 134,000 jobs in September. The November numbers are also expected to get a pre-Thanksgiving and Christmas lift as retailers hire hundreds of extra staff to cope with the upcoming holiday season.

The market expected the Novemeber employment report released Friday to see nonfarm payrolls rise in line with longer-run trends in monthly employment growth at a consensus of 200,000 new jobs. Logic suggested a return to the mean after the volatility in the hiring data. The wages data gives us indications of the FOMC plans on rates into 2019 and 2020. Last month unemployment remained at a 48 year low on higher participation and the two month NFP revision was -12,000 change to jobs.

November U.S. Employment Report Recap

US Jobs Nov 2018


Employment:

  • Non-farm payrolls  155k vs +198K expected, Prior 237K (revised from 250K)
  • Unemployment rate 3.7% vs 3.7% expected/prior
  • Participation rate 62.9% vs 62.7% prior
  • Underemployment rate 7.6% vs 7.4% prior
  • Two month net revision -12K
  • Private payrolls +161K vs 198K expected 

Wages:

  • Average hourly earnings +3,1% y/y vs 3.1% exp, Prior  3.1% y/y
  • Average hourly earnings +0.2% m/m vs +0.3% m/m exp
  • Hours worked 34.4 vs 34.5 expected Prior hours worked 34.5  

US Jobs Nov 2018 Earnings by Industry

Household Survey Data

In November, the unemployment rate was 3.7 percent for the third month in a row, and the number of unemployed persons was little changed at 6.0 million. Over the year, the unemployment rate and the number of unemployed persons declined by 0.4 percentage point and 641,000, respectively.

Among the major worker groups, the unemployment rates for adult men (3.3 percent), adult women (3.4 percent), teenagers (12.0 percent), Whites (3.4 percent), Blacks (5.9 percent), Asians (2.7 percent), and Hispanics (4.5 percent) showed little or no change in November. The number of long-term unemployed (those jobless for 27 weeks or more) declined by 120,000 to 1.3 million in November. These individuals accounted for 20.8 percent of the unemployed.

Both the labor force participation rate, at 62.9 percent, and the employment-population ratio, at 60.6 percent, were unchanged in November.

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers), at 4.8 million, changed little in November. These individuals, who would have preferred full-time employment, were working part time because their hours had been reduced or they were unable to find full-time jobs.

In November, 1.7 million persons were marginally attached to the labor force, an increase of 197,000 from a year earlier. (Data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey.

US Jobs Nov 2018. Industry

Establishment Survey Data

Total nonfarm payroll employment increased by 155,000 in November, compared with an average monthly gain of 209,000 over the prior 12 months. In November, job gains occurred in health care, in manufacturing, and in transportation and warehousing.

Health care employment rose by 32,000 in November. Within the industry, job gains occurred in ambulatory health care services (+19,000) and hospitals (+13,000). Over the year, health care has added 328,000 jobs.

In November, manufacturing added 27,000 jobs, with increases in chemicals (+6,000) and primary metals (+3,000). Manufacturing employment has increased by 288,000 over the year, largely in durable goods industries.

Employment in transportation and warehousing rose by 25,000 in November. Job gains occurred in couriers and messengers (+10,000) and in warehousing and storage (+6,000). Over the year, transportation and warehousing has added 192,000 jobs.

In November, employment in professional and business services continued on an upward trend (+32,000). The industry has added 561,000 jobs over the year.

Retail trade employment changed little in November (+18,000). Job growth occurred in general merchandise stores (+39,000) and miscellaneous store retailers (+10,000). These gains were offset, in part, by declines in clothing and clothing accessories stores (-14,000); electronics and appliance stores (-11,000); and sporting goods, hobby, and book stores (-11,000).

Employment in other major industries—including mining, construction, wholesale trade, information, financial activities, leisure and hospitality, and government—showed little change over the month. The average workweek for all employees on private nonfarm payrolls decreased by 0.1 hour to 34.4 hours in November.

In manufacturing, both the workweek and overtime were unchanged (40.8 hours and 3.5 hours, respectively). The average workweek for production and nonsupervisory employees on private nonfarm payrolls held at 33.7 hours. 

In November, average hourly earnings for all employees on private nonfarm payrolls rose by 6 cents to $27.35. Over the year, average hourly earnings have increased by 81 cents, or 3.1 percent. Average hourly earnings of private-sector production and nonsupervisory employees increased by 7 cents to $22.95 in November.

The change in total nonfarm payroll employment for October was revised down from +250,000 to +237,000, and the change for September was revised up from +118,000 to +119,000. With these revisions, employment gains in September and October combined were 12,000 less than previously reported. (Monthly revisions result from additional reports received from businesses and government agencies since the last published estimates and from the recalculation of seasonal factors.) After revisions, job gains have averaged 170,000 per month over the last 3 months.

The Employment Situation for December is scheduled to be released on Friday, January 4, 2019, at 8:30 a.m. (EST).

  

Employment Reports Ahead of BLS NFP

Job Cut Report - Challenger, Gray, and Christmas Inc - 6 December 2018

  • US November Challenger job cuts +51.5% vs +153.6% y/y prior 

The big story in the U.S. last month, however, was the announcement by General Motors that it would cut 15 percent of its workforce, or up to 14,000 employees, after offering 18,000 buyouts to workers in an effort to save over $6 billion. Challenger counted 14,000 cuts due to cost-cutting. GM’s announcement is the 7th largest single job cut announcement by an Automotive company since 2001, according to Challenger’s tracking.

“Announcements like GM’s will not be the last, as companies adapt to shifting consumer behavior. We’ve already seen major plans in the U.S. from Verizon, Wells Fargo, and Toys“R”Us for exactly those reasons,” said Andrew Challenger, Vice President of Challenger, Gray & Christmas, Inc.

Last month’s job cut total is 29.8 percent lower than the 75,644 cuts announced in October and 51.5 percent higher than the 35,038 cuts announced in the same month last year. So far this year, employers have announced 494,775 cuts, 28 percent higher than the 386,347 announced through this point last year. This is the highest 11-month total since 2015, when 574,888 cuts were tracked through November.

November ADP US Employment Report - 6 December 2018

  • US employment 179K vs 195K expected Prior was 227K (revised to 225K)
  • Goods +16K
  • Service +163K

"Although the labor market performed well, job growth decelerated slightly,"said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute.

"Midsized businesses added nearly 70 percent of all jobs this month.This growth points to the midsized businesses' ability to provide stronger wages and benefits. It also suggests they could be more insulated from the global challenges large enterprises face."

ADP Nov Change

Mark Zandi, chief economist of Moody's Analytics, said,"Job growth is strong, but has likely peaked.This month's report is free of significant weather effects and suggests slowing underlying job creation. With very tight labor markets, and record unfilled positions,businesses will have an increasingly tough time adding to payrolls."

US initial jobless claims

  • US initial jobless claims 231K vs 225K estimate
  • Continuing claims 1631K vs 1690K 
  • The four-week moving average for claims moved to 228K a gain of 4,250 in the current week

The largest increases in initial claims for the week ending November 24 were in Pennsylvania (+3,544), Wisconsin (+2,119), Massachusetts (+1,224), Kentucky (+1,181), and Oklahoma (+1,026),

The largest decreases were in Texas (-5,480), California (-4,245), Florida (-2,081), Illinois (-2,021), and Georgia (-1,679). 

 

 

 

 

 

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The Employment Situation for November is scheduled to be released on Friday, December 7, 2018, at 8:30 a.m. (EST).

Source: AFP, TradersCommunity Data, BLS

From The TraderCommunity Research Desk

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