Mixed Signals: December's Jobs Report

While headline payroll growth was relatively strong in December, weaker details under the surface continue to paint a mixed labor market picture.

The headline was shiny, but the details were duller. The Bureau of Labor Statistics (BLS) jobs report for December, released on Friday, had something in it for both the economic bulls and bears. Nonfarm payrolls were up 216K in December, which was well north of the 170K economists' consensus estimate. There was some weather-related flattering, with 87K folks "not at work due to weather" vs. a recent December average of 101K (2019-2022).

One immediate rub associated with the report was the 71K of downward revisions to the prior two months' readings. Another rub was overly optimistic "birth/death" (of businesses) assumptions, which added about 110K to the December payrolls release. A final rub was the massive 683K decline in household employment. As a reminder, the BLS conducts two surveys each month: the "establishment survey" from which the payrolls data comes, and the "household survey" from which the unemployment rate is calculated.

As shown below, there have been quite a few months since the spring of 2022 when the difference between the two surveys was quite dramatic. In fact, since April of 2022, the establishment survey tells a story of 5.8 million jobs having been created vs. the household survey's 3.0 million. For what it's worth, around important inflection points in the economy, the household survey tends to send the more accurate message about the health of the labor market.

Household survey dives

In addition, multiple jobholders jumped to 8.57 million, which is up to 5.3% as a share of those employed; those readings are up from about 7.5 million (in early 2023) and about 4.8% (in mid-2023), respectively. In the household survey, the number of full-time workers fell by the most since April 2020; the only gains were in part-time employment (which were of course offset by the decline in full-time workers).