The Breakdown:

Is the workforce data for December trustworthy?
January 11, 2023

Some important labor statistics were released last week and they came in stronger than expected, but is this data skewed because of the holidays? Let's take a look.

A stronger-than-expected Bureau of Labor Statistics (BLS) Jobs Report was released for December, stating that 223,000 jobs were created. While this came in 23,000 higher than expected, almost half of the job creations included in this report were part-time and, of those part-time job creations, more than half were people who hold multiple part-time jobs. It is likely that the report data was affected by holiday hires.

While the Jobless Claims data declined for December, it is also likely that the time of year played a part. The measure of people who continue to file for unemployment benefits after their initial claim was taken the week before Christmas. Given that continued claims have risen by 330,000 since October, it is likely that the dip in the trend is due to Christmas preparations and will revert back to the previous trend next report.

Thankfully, we have one piece of job data that was not likely affected by Christmas, the ADP Employment Report, as it accounts for payrolls in the private sector. The 235,000 jobs created were much stronger than the 150,000 expected. The report also noted that those who kept their job saw an annual pay increase of 7.3% while those who sought new employment saw an average increase of 15.2%.

This week, we're receiving two important measures of the US economy - the NFIB Small Business Optimism Index and December's Consumer Price Index. Stay tuned for next week's breakdown!

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