December 2016 Jobs Report

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December 2016 Jobs Report

Monthly Job Gains Continue at Steady Pace

Tuesday, January 10, 2017


The recent pace of moderate (and perhaps, sustainable) job gains continued in December. The initial estimate from the U.S. Bureau of Labor Statistics (BLS) indicated that total non-farm payroll employment increased by 156,000 jobs as the unemployment rate inched up to 4.7%. December’s job gains were well below consensus forecasts, but above the level considered sufficient to account for labor-force increases.


Top-Performing Metros See Smaller Job Gains 

The Past and Future of Manufacturing Employment 

By the Numbers

October’s job-gain figure of 142,000 was revised down to 135,000, while November’s was revised up from 178,000 to 204,000 -- a net increase of 19,000 jobs during the previous two months. December’s monthly number was more than 13% below the monthly average for 2016 of 180,000 jobs per month, but only 5.5% below the monthly average for the past three months.

Annual job growth continued to slow, slipping to 1.5% from November’s rate of 1.6% and down from 2.0% of December 2015. Annual job gains were 2.157 million, 587,000 less than 2015’s total and the lowest annual rate since 2012.

Average hourly earnings (wages) for privately-employed workers were a bright spot in the BLS’ release, increasing to 2.9% on an annual basis in December, up by 40 basis points (bps) from last month’s 2.5%. 

Job openings decreased slightly to 5.53 million from the previous month’s revised level of 5.63 million, according to the BLS’ Job Openings and Labor Turnover Survey, a decrease of about 97,000. Professional & Business Services accounted for the largest decrease with 187,000 fewer openings, partially offset by 133,000 more openings in the Education & Health Services sector. Hiring was down by 22,000, and separations were down 61,000 from the previous month.

The headline unemployment rate ticked up to 4.7% in December, according to the Current Population Survey. The civilian labor force participation rate increased by 10 bps to 62.7%; an increase in the unemployed persons looking for work pushed that rate up slightly. The employment-population ratio has remained at 59.7% for the past three months.

The number of part-time workers for economic reasons decreased by 74,000 from last month but is down by more than 470,000 from December 2015. The U6 unemployment rate, which includes these part-timers and marginally attached workers, continued to improve, falling to 9.2%, down 50 bps from last year.

In addition, the number of long-term unemployed (27 weeks or more) decreased by 25,000 from November, and was 263,000 lower than December 2015. The number of multiple jobholders decreased by 180,000 from December 2015 to 7.7 million, and the number of discouraged workers not in the workforce (426,000) plunged by 237,000 from one year ago.

Industry Focus

The not seasonally adjusted unemployment rate for the oil and gas extraction industry was at its lowest level since November 2014, dropping to 3.7% in December from 11.2% in December 2015. Information (+20 bps), Professional & Business Services (+10 bps), and Government (+10 bps) were the only major industries to increase (albeit slightly), while notable decreases were seen in the Leisure & Hospitality (-100 bps) and Transportation & Utilities (-40 bps) industries.

The Education & Health Services (+70,000) supersector dominated all industries in job gains for December. Four industries lost jobs: Other Services (-8,000), Information (-6,000), Construction (-3,000), and Mining & Logging (-2,000). The remaining industries gained a moderate number of jobs.


  • The Education & Health Services supersector featured strong gains in health care (+43,200), particularly in ambulatory health care services (+29,700) and hospitals (+10,700). The social assistance subsector of individual and family services added 21,000 jobs while the education sector added an additional 6,300 jobs.

  • Leisure & Hospitality’s net gain of 24,000 came from 34,500 new jobs in the accommodation and food services sector offset by losses of 9,900 in arts, entertainment and recreation.

  • The Trade, Transportation & Utilities supersector also added 24,000 net new jobs, led by transportation and warehousing (+14,700), retail trade (+6,300) and wholesale trade (+2,000). The retail trade subsector of general merchandise stores lost 23,900 jobs in December, while clothing stores added 10,300.

  • Manufacturing’s 17,000 job gain was almost entirely in the durable goods sector (+15,000), spread throughout several subsectors, while nondurable goods manufacturing gained only 2,000 jobs. 
  • The Professional & Business Services supersector gained 15,000 jobs, primarily from services to buildings and dwellings (+10,600) -- although, like Manufacturing, several subsectors had positive contributions. The accounting and bookkeeping services and temporary help services lost 13,200 and 15,500 jobs in December, respectively.

  • Credit intermediation and related activities (+6,900) contributed more than half of Financial Activities’ 13,000 monthly gain.

  • Government (+12,000) gained 11,000 local government and 5,000 federal government jobs, but lost 4,000 state government jobs.

  • After the national election, the Other Services loss of 8,000 jobs was primarily in the membership associations and organizations subsector (-7,700) which includes the business, professional, labor, political and similar organizations industry group.

  • The Information industry (-6,000) again lost jobs in several subsectors, including motion picture and sound recording industries (-7,100), telecommunications (-2,100) and publishing industries (‑500), but gained in other information services (+2,400) and data processing, hosting, and related services (+1,600).

  • Residential specialty trade contractors’ gain of 11,700 jobs was more than offset by losses in the heavy and civil engineering construction (-8,900) and construction of buildings subsectors for a net loss of 3,000 Construction jobs. Meanwhile, Mining & Logging lost an additional 2,000 jobs in December.

Top-Performing Metros See Smaller Job Gains

The top nine metropolitan areas among the 120 in our Jobs Report adding the most jobs in the 12 months ending in November (the latest metro-area figures available) were the same as they were in October, though several changed positions.

Once again New York and Dallas retained the top two spots, while Atlanta and Los Angeles traded the Nos. 3 and 4 spots. Seattle and Washington, DC retained the Nos. 5 and 6 spots, while Orlando returned to No. 7. Boston moved up one spot to No. 8 as Denver slid to No. 9. Anaheim also moved down one spot to No. 11, as St. Louis moved up to No. 10.

Together, the total jobs created in the 12 months ending in November for the top 10 metros were down 3.9% from the annual total in October (619,300 vs. 644,400) and down 8.5% from the 12-month total for November 2015 (619,300 vs. 676,800). This was also the first month that perennial leader, New York, added less than 100,000 jobs since June 2013.

A few metros dropped sharply in the rankings: Phoenix plunged from No. 11 to No. 31, Charlotte fell from No. 18 to No. 29, and Cincinnati went from No. 32 to No. 36. Conversely, a few metros moved up in the rankings from last month: Riverside jumped from No. 23 to No. 13, Chicago moved from No. 27 to No. 20, and Fort Worth from No. 31 to No. 24. Houston remains positive, but improvement has slowed, moving to No. 38 from No. 40 in October.

Annual job growth slowed in five of the top 10 markets in November:

  • Dallas (-122 bps)
  • New York (-86 bps)
  • Los Angeles (-57 bps)
  • Atlanta (-47 bps)
  • Washington, DC (-4 bps)

Job growth was up or flat in:

  • St. Louis (+155 bps)
  • Boston (+66 bps)
  • Seattle (+56 bps)
  • Denver (+13 bps)
  • Orlando (0 bps)

Losses in energy and manufacturing employment kept Oklahoma City in the cellar of the bottom-five job gains list. Milwaukee, WI has been hit hard by layoffs at JP Morgan Chase, Northwestern Mutual, Caterpillar and Harley-Davidson, while the closing of the Sikorsky facility in Bridgeport, CT hurt that economy. Syracuse, NY lost jobs in the Leisure & Hospitality, Professional & Business Services and Manufacturing industries, while the 1,600 jobs lost in Virginia Beach, VA were almost entirely in Manufacturing, specifically ship building.

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The Past and Future of Manufacturing Employment

During the 2016 presidential election, President-elect Donald Trump placed the return of manufacturing employment front-and-center in his campaign, vowing to return American manufacturing to its post-war Golden Age. However, a deeper look at manufacturing employment — and how it has changed over the last several decades — presents a more complicated picture, one that has major implications for the future of employment, economic growth and real estate fundamentals.

As of November 2016, about 19.7 million Americans were employed in the manufacturing sector. This represents a 13% decrease from the pre-Great Recession peak of 22.6 million manufacturing employees, and a 14% drop from 1994, the year the North American Free Trade Agreement (NAFTA) took effect. Whereas about 30% of all employees were in manufacturing in the mid-1950s, only 8.5% of all workers are in manufacturing today.

However, despite falling employment levels, manufacturing output levels have grown dramatically, beginning in the early to mid-1990s. Using an index for employment and output levels, while the employment index fell about 28% since 1994, the output index has grown by an astonishing 51%.

In fact, falling employment but growing output levels in the manufacturing sector are two sides of the same trade-driven story. The factories that employed the most workers were the ones that went abroad, depressing overall manufacturing employment levels, but leaving behind the most productive and high-tech manufacturing jobs stateside. As a result, the typical American factory looks and operates very differently than it did back in the so-called Golden Age.

Regional economies were affected by these changes as worker-heavy industries moved out of the country. Textiles in the Northeast, furniture in the Southeast and automobiles and steel in the Midwest are a few examples. However, some regions or metro areas gained manufacturing jobs in the aerospace and energy industries (i.e. Seattle; Charleston, SC; Houston; Oklahoma City; Fort Worth).

An important corollary to the decline in manufacturing employment is the explosive growth in service-sector employment. As manufacturing employment fell by 14% from 1994-2015, service-sector employment grew by 33%. Today, more than 125 million workers are employed in service-sector occupations, representing about 86% of all employees nationwide. The services-providing sector shows no sign of slowing, with the BLS projecting a compound annual growth rate of 0.7% through 2024 — compared to essentially zero growth for goods-producing employment (which includes mining, construction and manufacturing jobs).

The challenge in modeling the impact of manufacturing employment at the national and sub-national level flows from the paradoxical relationship between growth and productivity: to grow the manufacturing sector in the US would mean increasing the productivity of US manufacturing — but productivity-enhancing measures typically mean automation. The more that manufacturing work comes to be automated, the fewer manufacturing employment opportunities there are — particularly among blue-collar workers.

The controversy surrounding manufacturing employment serves as a microcosm for a much more pernicious problem afflicting the U.S. economy: Productivity growth is in a historic slump, which in turn limits potential economic growth. 

In the immediate post-war years, American labor productivity grew, on average, by 2.8%. This was a time when new technological innovations spread throughout the globe, bringing some degree of automation to the manufacturing sector. This Golden Age fell apart in the face of the oil crisis and increasing foreign competition in manufactured goods. Productivity rates grew dramatically in the mid- to late 1990s with the arrival of computers and information technology. But this revival was short-lived and caused no shortage of anxiety about the loss of “Mom-and-Pop” retail establishments to big-box stores with fancy inventory-management technologies. Productivity rates were never able to match the 1990s surge, and since the end of the Great Recession, productivity growth has been exceptionally low.

When manufacturing jobs were plentiful, Americans without a college degree benefited greatly with rising incomes and living standards through the early 1970s. Now that manufacturing in the U.S. has moved toward high-technology and less labor-intensive production processes, blue-collar workers are increasingly left behind — often in lower income service-sector employment.

Lower incomes and declining living standards (to say nothing of the complicated political implications) reverberate throughout the economy. As we look ahead, one has to wonder what increasing automation in service-sector employment (whether that be in retail establishments or accounting firms) would mean for the broader economy.

By the Numbers

The following table shows November 2016 (the latest data available) metropolitan-area job gain and job growth, some grouped by state or region.



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