Inside The “Strong” Jobs Report: Full-Time Workers -1K; Part-Time Workers +679K

Zero Hedge – by Tyler Durden

Reading the mainstream media’s reaction to today’s payrolls report, one would be left with the impression that it was generally on the goldilocks side and indicative of a possible soft-landing – consider this from Bloomberg: “the US labor market stayed resilient last month while wage gains cooled, raising hopes that the economy may dodge a recession and the Federal Reserve will further slow its aggressive campaign of interest-rate hikes.”

Which is accurate: wage growth indeed slowed down following a major revision to the data (remember that 0.6% M/M jump in average hourly earnings that freaked out the market last month? Well, it was quietly revised to 0.4% today), and as a result – as even Fed mouthpiece Nick Timiraos pointed out earlier – “Revisions to average hourly earnings data paint a marginally less worrisome picture for the Fed on wages than the Nov report. The upturn in wage growth in Nov (originally reported as +0.6%) was revised (to +0.4%). The 4.6% annual wage growth in Dec was the lowest since Aug ’21.

The drop in wage growth was consistent with the warning from the ADP earlier this week, which found that December ushered in “the largest decline in pay growth for job stayers in the three-year series history” (and even job-changers saw a modest drop in wage growth).

There was more: not only did average hourly earnings drop, but so did average hours worked, which has a major impact on the average wages, and had hours been flat, the decline in average wages would have been even more pronounced.

Ok, so wages are finally starting to reflect reality – and indicating that inflation pressures are clearly easing, which is to be expected for any economy sliding into a recession.

But what about the underlying issues with the jobs data? What about that massive divergence between the employment number (from the Household Survey) and the monthly payrolls change (from the Establishment survey). Recall that it was just last month that we reported that divergence between these two data sets hit a record 2.7 million, a difference which got added focus just a few days later after the Philadelphia Fed reported that its own calculations found that in Q2 the US added just 10,000 jobs, not the 1.1 million reported by the BLS.

The answer is that today, the BLS decided to finally shrink the record difference between the Household and Establishment surveys, and while 223K payrolls were added (a number which was actually down 244K on an seasonally unadjusted basis), the Household survey outdid itself, and its matching Employment number soared by a whopping 717K.

Charts and the rest is here:

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