THE CONFUSING US LABOUR MARKET - Tanishq Shukla
Some headline writers concentrated on the negative news when the US government released the employment data for November last week. However, the report's data was mixed and, to some extent, perplexing. On the one hand, the establishment survey revealed modest job growth (which was the focus for headline writers). The household survey, on the other hand, revealed a quick expansion of employment, increasing labour force participation, and a substantial drop in the unemployment rate. As a result, one could claim that the job market is slowing or speeding up. It's difficult to say. Let's have a look at the numbers. The US government publishes two reports on employment: One is based on a survey of businesses, while the other is based on household data. In November, the establishment survey revealed that only 210,000 new jobs were created, far fewer than forecasts projected and far less what research conducted by ADP indicated and a far cry from the 546,000 jobs added in October. What went wrong, exactly? Only three industries account for the great majority of the dramatic slowdown in employment growth: automotive manufacture, retailing, and leisure & hospitality.
First, while overall manufacturing job growth was good, employment at automobile manufacturers decreased, owing to ongoing supply chain disruptions caused by a semiconductor shortage. Second, there was a drop in retail jobs due to a drop in general merchandise and apparel outlets. These figures have been corrected for the season. As a result, retail employment growth was less than typical throughout the holiday season. This could be due to more online shopping or early Christmas shopping. Third, after increasing in October, leisure and hospitality employment hardly increased in November. Both eateries and hotels experienced slow job growth. It's unclear if this was due to lower consumer demand or a supply shortage. a persistent labour shortage—or both. In any case, it's worth noting that monthly job growth can be unpredictable and that a month's slowdown isn't always indicative of a trend. Meanwhile, a separate household poll reveals a quite different picture. According to the report, the number of persons opting to work increased considerably faster than the working-age population, enhancing the rate of participation. Furthermore, employment increased even faster, lowering the unemployment rate from 4.6 percent in October to 4.2 percent in November. According to the report, 1.1 million new jobs were created in November. Self-employment is included in the household survey, which helps to explain the high number. The large difference between the two figures is what makes the November employment data so perplexing. Investors raised bond rates to their lowest levels in response to the jobs news. Since mid-September, it has been at this level. They most likely saw the dismal employment growth data as indicating a potential slowdown in growth. This, paired with the omicron variant's prolonged uncertainty, is likely creating a shift in market opinion. Most analysts use the business side of the survey since it is less volatile than the individual survey. However, when they present such disparate stories, it's necessary to delve a little deeper. With all other indicators pointing to more job growth in November than the business survey indicated, and the previous history of major revisions, the individual report is likely to be a more accurate reflection of what is happening in the labour market right now. It's a good reason, at the very least, not to get too worked up about the poor headline employment growth rate.
First, while overall manufacturing job growth was good, employment at automobile manufacturers decreased, owing to ongoing supply chain disruptions caused by a semiconductor shortage. Second, there was a drop in retail jobs due to a drop in general merchandise and apparel outlets. These figures have been corrected for the season. As a result, retail employment growth was less than typical throughout the holiday season. This could be due to more online shopping or early Christmas shopping. Third, after increasing in October, leisure and hospitality employment hardly increased in November. Both eateries and hotels experienced slow job growth. It's unclear if this was due to lower consumer demand or a supply shortage. a persistent labour shortage—or both. In any case, it's worth noting that monthly job growth can be unpredictable and that a month's slowdown isn't always indicative of a trend. Meanwhile, a separate household poll reveals a quite different picture. According to the report, the number of persons opting to work increased considerably faster than the working-age population, enhancing the rate of participation. Furthermore, employment increased even faster, lowering the unemployment rate from 4.6 percent in October to 4.2 percent in November. According to the report, 1.1 million new jobs were created in November. Self-employment is included in the household survey, which helps to explain the high number. The large difference between the two figures is what makes the November employment data so perplexing. Investors raised bond rates to their lowest levels in response to the jobs news. Since mid-September, it has been at this level. They most likely saw the dismal employment growth data as indicating a potential slowdown in growth. This, paired with the omicron variant's prolonged uncertainty, is likely creating a shift in market opinion. Most analysts use the business side of the survey since it is less volatile than the individual survey. However, when they present such disparate stories, it's necessary to delve a little deeper. With all other indicators pointing to more job growth in November than the business survey indicated, and the previous history of major revisions, the individual report is likely to be a more accurate reflection of what is happening in the labour market right now. It's a good reason, at the very least, not to get too worked up about the poor headline employment growth rate.
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