Economists viewed the latest jobs numbers as at least moderately encouraging, although some of them warned, as usual, against reading too much into the results of any single month — especially December.
“Things are looking a bit better,” as Morgan Stanley’s David Greenlaw and Ted Wieseman summed it up, “but, we wouldn’t get too carried away just yet.”
Ian Shepherdson of High Frequency Economics was more ebullient. “We see these trends as sustainable,” he wrote. “This is the real deal for the U.S. economy, at last.” He reckoned that private companies held off hiring in the summer and fall as consumer confidence fell, but then began to hire once it became clear that spending was holding up. And the loss of government jobs was “clearly slowing,” he said.
Some economists noted that a seasonal bump each December in jobs held by couriers was typically followed by layoffs in January, once all the holiday gifts were delivered.
And some offered other cautionary notes and qualifiers.
“The pace of job growth in recent months, while still not satisfactory compared to most past cycles, at least seems sufficient to generate enough income growth to keep consumer spending moving ahead at a moderate pace,” wrote Joshua Shapiro of MFR. “The big question as we enter 2012 is whether the labor market improvement will be sustained in the face of recession in Europe and other economic and financial headwinds. We believe that a moderate pace of job growth will be recorded in 2012, but there clearly are numerous downside risks that must be watched closely.”
He added gloomily that younger workers “are increasingly giving up hope of finding a job,” in part because older workers are hanging on to their jobs longer than they had planned, as their retirement funds and home values are depleted.
Michael Gapen of Barclays Capital Research, too, warned against overstating the good news.
“While we characterize this employment report as upbeat and consistent with the underlying acceleration in economic activity in the second half of last year,” he said, “we suggest that the December data probably overstate the rate of improvement in labor market conditions.”
He found support for that thesis in the underlying numbers, especially within the 200,000 gain in nonfarm payroll jobs. Gains in construction and manufacturing were “well above prior trends,” which had been flat. Half the month’s 90,000-job increase in trade and transport came from the seasonal bump in delivery jobs. He figures that a three-month moving average of private payroll growth, running at about 137,000, is “a more reasonable indicator.”
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