US job losses in November down, unemployment figure revised down

The good news is that US job losses were only 11,000 in November. The Bureau of Labor Statistics has also revised previous figures for September and October by effectively reinstating 148,000 jobs previously described as lost in a reevaluation.

Estimates of job losses were 111,000 so these figures came a very pleasant surprise, even for the more optimistic predictions. The general tone of these figures is good, but there's some skepticism, too. There are also indications of a pre-hiring phase among US employers. Although wages for US employees went up by a princely 1c an hour overall, (well, it is getting close to Christmas), average earnings went up by $4 a week, reflecting an increase in hours worked. That, say experts, is a typical trend before hiring picks up. The net result of the good news is that the new figure for US unemployment is now 10%, down from 10.2%. As usual, and with some reason, not everybody’s buying the recovery scenario based on what would in normal times be a fairly strong, but normal, move in employment figures. Although this data does include definite positive indicators, the caution is also well founded on basic employment market practices. This time of year, pre-Christmas, is also a period of seasonal employment movements. The positive element is that in normal times employment picks up around about now, so a sign of normalcy actually is a good sign. The possible negative element is that the quality of this employment isn’t well defined. It’s not entirely clear what these jobs are. Apparently some of the new hiring was of temporary staff, indicating some traditional caution by employers, but also indicating a need to hire, meaning some positive expectations, at least. To explain why this gift horse is getting a full dental examination: Analysis of these figures by professionals has been understandably cautious. This is one of the trickiest employment markets ever seen, and the primary driver for analysis is getting the trends right. Statistics like these are often targets for serious, legitimate, criticism. They're frequently accused of being manipulated and read selectively. In practice, highly suspicious economists go looking for corroborative evidence in other stats, before they believe any hype. This recession has produced some of the toughest, most thankless, analytical work in economics, all difficult, and involving tracking a moving target with a tendency to sudden changes. All general stats also have some margin for error, and the current situation is very abnormal, with added factors. Economists have to be very thoughtful about figures like these, before accepting them. There are a few basic preconditions required for definite confirmation of an economic upturn. For example, a real increase in new jobs would produce, in following months: 1.Increased discretionary spending 2.Core consumer sales of staples like food, clothing, etc. 3.Higher order and sales volumes in industry 4. Increased car sales 5. New home purchases 6. Lower default rates on credit, bills, etc. In a severe recession like this one, these things would take a while, partly because of a slow hiring rate and partly because the people with new jobs would be spending quite a bit of money getting rid of the financial deadwood from their unemployed days. The clear indicator to be derived from the low job losses is that overall, jobs aren’t being shed, and employers are sufficiently confident to retain staff. That’s a reasonable indication of some level of stability, and at least a short term positive outlook. Nobody’s blowing the trumpets just yet among professional analysts. Good Christmas sales could be a very positive indicator, meaning there’s more free cash in the US economy than is generally expected. Good New Year sales would be another positive marker, meaning there’s enough free cash to go bargain hunting. A combination of both would be excellent news, and would be economically considered proof positive of genuine improvements to the employment market baseline. Long term unemployment isn’t looking so good, as the months pass. This is actually a statistical inevitability, created by the employment market’s previous stagnation, and the relative percentages of numbers unemployed to new vacancies. That’s another indicator that has to start looking a lot healthier before the end of the recession can be proven to everyone’s satisfaction. The general response to the figures, including the political spin, has been upbeat. (Apparently spin doctors are never fired, only the rest of the country.) They’ve got a tough audience this time. Cautious optimism is the name of the game among the professionals, and “employ” is a verb, not an adjective. The US doesn’t need spin, it needs jobs. That’s the real bottom line.