Never mind the outlandish expectations set last week by ADP's estimate of private job growth. At 103,000, the actual figures released Friday by the Bureau of Labor Statistics (BLS) came in well below analyst expectations of 150,000.
And if you look below the surface, you'll find a deeply divided labor market. While there are plenty of broadly encouraging signs, structural unemployment continues to be painful as the ranks of the long-term jobless keep swelling -- a distinction that should be far more central to government policy than it currently is.
Still, overall trends in the labor market are starting to impress even some noted bears.
"I know that everyone expects me to tell them that the headline number of 103,000 was too soft," money manager John Mauldin wrote in a research note. "But there were revisions of a plus 70,000 for the last two months," Mauldin wrote, adding that there have now been upward revisions to initial estimates for four months in a row.
Other Positive Signs
The upward revisions are particularly promising because of the methodology the BLS uses. "The BLS does its best at guessing the right number in a systematic way," Mauldin wrote. "And usually it is not all that bad a guess." Except, Mauldin wrote, at turning points in the economy. "When the economy starts to recover from recession, they underestimate the number of jobs."
There were positive signs elsewhere, too.
The average workweek ticked up to 33.6 hours from 33.5 hours month-over-month, and aggregate hours worked increased 0.1%, Ned Davis Research wrote in a note to clients. The monthly change in average hourly earnings compared to last year "jumped to 1.8% from 1.6%," he wrote, "the biggest increase in over two years and bears watching over the next few months."
Payrolls increased by 1.1 million for 2010, putting the labor market recovery on better footing than after the last two recessions. "Private payrolls are tracking a little better than the 1991 'jobless recovery' but much better than the 2001 'jobless recovery,'" Ned Davis Research wrote.
Underwhelming Efforts So Far
Unfortunately, these trends are of little comfort to the very workers who have suffered the longest. The number of people out of work for more than six months increased by 113,000 to 6.4 million and accounted for over 44% of the unemployed. "Evidence of structural unemployment was more acute," Ned Davis Research wrote.
Current U.S. economic policy to deal with chronic unemployment -- which consists largely of prolonged monetary policy easing by the Federal Reserve and legislative fiscal boosts like extending tax cuts -- remains underwhelming. The growing number of job openings, for example, speaks to a shortage of skills as much as a shortage of work. Efforts to retrain workers may have a much greater payoff compared with moves to simply boost demand.
Government hiring of workers for public services, as some prominent economists have advocated, should also be considered.
Beyond the disappointing headline numbers, December's jobs report does show that things are getting better. Except, sadly, for those who have it the worst.
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