This morning, investors received some more positive news on the U.S. economy when the Department of Labor released its report on employment and unemployment for the month of December at 8:30 A.M. EST. Specifically, the report showed that the nation’s nonfarm payrolls increased by 200,000 last month. This comes on the heels of yesterday’s report from payroll processing giant Automatic Data Processing (ADP) that the private sector added a seasonally adjusted 325,000 jobs in December, up from 204,000 in November and the largest monthly increase since December, 2010.
The latest government employment data is encouraging, as 200,000 monthly new additions are typically viewed as the rate needed to make a dent in the nation’s unemployment rate. Not surprisingly, given the aforementioned latest jobs creation figures, the unemployment rate, which is more of a lagging indicator, decreased from 8.7% in November to 8.5% last month—the unemployment rate has declined by 0.6 percentage points since August. We believe this data are also a positive development for struggling housing market, which has also shown some signs of selective improvement in recent months.
A closer look at the December figures showed that nonfarm payrolls increased by 1.6 million in 2011. In the private sector, payrolls rose by 212,000 last month and by 1.9 million over the past 12 months. The private-sector job creation last month helped offset a slight decline in government paying jobs.
Employment in the transportation and warehousing (+50,000 positions) rose sharply, while the retail trade sector continued to add jobs in December, to the tune of 28,000 new positions. And, manufacturing employment expanded by 23,000 jobs. The retail and manufacturing increases are not surprising as the Institute for Supply Management, in separate reports this week, reported that manufacturing and nonmanufacturing (i.e., services) activity for the month of December strengthened.
All in all, the latest report on employment and unemployment is another positive development for the U.S. economy, where expansion over the last 12 to 18 months has not been as strong as many economists would have hoped for following one of the worst recessions on record. More importantly, many businesses are now hinting they are ready to step up hiring in early 2012 after seeing stronger consumer confidence and greater demand for their products over the final stages of 2011 (we are estimating GDP growth of nearly 3% in the just-completed fourth quarter). If this holds true, further headway on the jobs creation front may be on tap in 2012.
At the time of this report's issuance, the author did not hold positions in any of the companies mentioned.