Economic Update

December 2012

Michael Hespen

National Account Executive

3rd Qtr GDP: 2.7% (2nd Estimate)

Sources: Bureau of Labor Statistics, Wall Street Journal, Bureau of Economic Analysis

Revisions to Previous Reports Bureau of Labor Statistics

September Revised from +148,000 to +132,000 (-16,000 Jobs)

October Revised from +171,000 to +138,000 (-33,000 Jobs)

Total: - 69,000 Jobs

Four Takeaways From November’s Jobs Report WSJ

So much for that Sandy effect: Superstorm Sandy was widely expected to push up

unemployment and, more generally, to wreak havoc on the jobs numbers. Neither appears to

have happened. The economy added 146,000 jobs in November, right about its recent average,

and the unemployment rate fell to the lowest level since 2008. What’s more, the Labor

Department “did not substantively impact the national employment and unemployment estimates

for November.” That doesn’t mean Sandy had no effect — it just didn’t show up in the national-

level figures.

Broadly positive report: Retailers added 53,000 jobs, continuing a run of recent gains. The

number also may have been boosted by an early Thanksgiving, which made holiday hiring show

up earlier than usual. Restaurants and hotels also added workers, as did wholesalers, and

professional service firms hired a healthy 43,000 workers. The health care sector, which has added to payrolls throughout the recovery, did so again, adding 20,000 jobs. The main bad news

came in construction, which cut 20,000 jobs, and manufacturing, which was more or less flat.

Some of the industry-by-industry changes may have been affected by Sandy, but the Labor

Department didn’t provide any estimates.

Bad news in the revisions: November’s data easily beat economists’ expectations, but the

good news was tempered somewhat by downward revisions to payroll figures from September

and October. Together, the revisions wiped out 49,000 jobs. Perhaps more of a concern is that

economists often watch the direction of the revisions for signs of where the job market is

heading: Figures are often revised upward in an improving economy and downward in a

worsening one. In recent months, the trend had been for upward revisions, but not this time.

Right on trend: The economy has now added an average of 139,000 jobs per month over the

past three months. Over the past six months? 139,000 jobs per month. Over the past year?

157,000. In other words, for all the talk of economic starts and stops, employers are creating jobs

at a remarkably consistent pace. It’s a much slower pace than most people — including

policymakers at the Federal Reserve — would like to see, but it’s been enough to bring down the

unemployment rate by a full point over the past year.

2011 2012

Components of GDP 1st 2nd 3rd 4th 1st 2nd 3rd

Consumers 2.22% 0.70% 1.18% 1.45% 1.72% 1.06% 0.99%

(Personal Consumption)

*Businesses -0.68% 1.40% 0.68% 3.72% 0.78% 0.09% 0.86%

(Gross Private Domestic Investment)

Net Exports

0.03% 0.54% 0.02% -0.64% 0.06% 0.23% 0.14% (Exports-Imports)

Government -1.49% -0.16% -0.60% -0.43% -0.60% -0.14% 0.67%

Total GDP 0.08% 2.48% 1.28% 4.10% 1.96% 1.24% 2.66%

*Inventories -0.54% 0.01% -1.07% 2.53% -0.39% -0.46% 0.77%

component of Business

Number of people employed as a temporary employee

divided by total non farm payroll employment

Temp Employment

Temporary help services gained18,000 jobs.

Why is the Temp Penetration Rate Important?

“Temporary Help Employment is a Leading Indicator for

Nonfarm Employment—Staffing job trends lead

nonfarm employment by three months when the

economy is emerging from a recession and by six

months during periods of normal economic growth.”

American Staffing Association

Temp Penetration Rate: 1.91% 0.01% Job Loss/Gain: + 146,000 Jobs Unemployment Rate: 7.7% 0.2%

I

Unemployment Rate: Bachelor’s Degree or higher

July Aug Sept Oct Nov

4.1% 4.1% 4.1% 3.8% 3.8%

Source: Bureau of Labor Statistics, American Staffing Association

Nonfarm Payroll – Job Growth Details

Jobs Added/Lost

Private Sector 147,000

Government Sector -1,000

Total 146,000 Job Losses Change from Previous

Month

Construction -20,000

Manufacturing -7,000

Government -1,000

Job Gains Change from Previous

Month

Retail Trade 52,600

Professional & Business

Services 43,000

Leisure & Hospitality 23,000

Financial Activities 1,000

Education & Health

Services 18,000

- Education -3.7000

- Healthcare 20,000

- Social Assistance 2,000

Labor Market Trudges Forward (Wall Street Journal)

GDP Projections Survey of Economists (Wall Street Journal)

Unemployment Rate Projections Survey of Economists (Wall Street Journal)

Source: Wall Street Journal, New York Times Please note: WSJ Projections were released prior to the BLS report

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