Highlights
December employment data showed moderate but not disappointing growth as non-farm payrolls rose 157,000, a bit under expectations but made up for by net upward revisions of 34,000 to November (+137,000 from +112,000) and October (+312,000 from +303,000).

Quarter-to-quarter change shows moderate improvement, with jobs up an average 202,000 in the fourth quarter against a rise of 134,000 in the third quarter.

Details from the establishment survey were mixed. Manufacturing jobs remained weak, rising only 3,000. The level continues to contrast with stronger readings in the Institute For Supply Management and Philadelphia Federal Reserve manufacturing reports. Other categories in the goods-producing group included construction, up a very modest 7,000 for a second month, and transportation equipment, up only 2,000.

But growth was solid in service industries where jobs rose 144,000. Professional & business services saw a sharp 41,000 rise in the month. Finance & insurance saw solid increases as did local and state education jobs. Temporary help, often a category looked at as a leading indicator for other categories, rose a modest 9,000. Retail jobs, usually volatile during the holidays due to seasonal adjustment problems, fell a sharp 19,600 and may have skewed overall results a bit lower (revisions to the retail category in later reports may eventually give a boost to December's overall data.)

Average hourly earnings showed very little pressure, rising only 0.1 percent on the month and 2.7 percent on the year. The change suggests that workers have little bargaining power, which is good for inflation but indicates soft demand for labor.

But the average workweek did rise 6 minutes to 33.8 hours, hinting perhaps at job gains in future months. Note manufacturing hours were unchanged as was manufacturing overtime and, together with the weak manufacturing payroll growth, point to soft industrial production data later this month.

Data from the household survey were also mixed and showed little effect from revisions. The unemployment rate was unchanged from November at a healthy looking 5.4 percent, but the labor force contracted as did employment. The employment-to-population ratio, a key reading that limits uncertainty on why workers are leaving the workforce, fell by a tenth to 62.4 percent.

The financial markets initially showed limited and mixed reaction to the report. The data do not change the outlook for Federal Reserve policy with another 25-basis-point rate increase at the Feb. 1 FOMC seemingly assured.

Yet employment growth remains limited at best -- barely sufficient to meet natural growth in population. Productivity growth continues to limit the need for employers to add workers, a long trend that will continue to keep wages down and limit gains in consumer confidence and consumer spending.

2005 Release Schedule

Released On: 1/7 2/4 3/4 4/1 5/6 6/3 7/8 8/5 9/2 10/7 11/4 12/2 Released For: Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov