The Tortoise and the Hare
Anyone who was expecting the November jobs report to be full of confusing distortions, mostly due to Hurricane Sandy, was pleasantly surprised. The data are credible and the picture remains clear. Part of the reason for this triumph of measurement over adversity is the professionalism of U.S. statistical agencies. Under the Bureau of Labor Statistics (BLS) definitions, it’s difficult for even severe weather events to significantly impact employment and unemployment data-although weather can impact average weekly hours. As the Bureau notes, employees who receive pay for any part of a pay period, even 1 hour, are counted in the payroll employment figures. In the household survey, which is used to calculate the unemployment rate, persons who miss work for weather-related events are counted as employed whether or not they are paid for the time off.
The BLS thus concludes that Hurricane Sandy, destructive as it was, did not substantively impact the quality of the data in the November report. I do think there might have been some causal impacts, however. Construction employment, which had been modestly positive since May, fell off by 20,000 in November. I also wonder about a sizable drop in food manufacturing employment (a loss of 12.3 million jobs), although the port strike might be playing a role here, as well.
Through the storm and heightened fiscal policy uncertainty, the U.S. job market story remains remarkably consistent-slow job growth and little progress in long-term unemployment. Total manufacturing employment hasn’t budged since May, which is actually a little better than might have been expected given the dramatic slowdown in factory sector output growth.
Since the beginning of the year, payroll employment growth has averaged 151,000 per month, remarkably close to the 2011 average of 153,000. We need it to be twice that. The frustrating persistence of long-term unemployment is very costly at a time when public sector budget pressures are a significant threat to the short-term economic outlook. You have to admire the durability and consistency of the tortoise that is the U.S. labor market. But we need him to get in shape-and become more like the hare.