U.S. job growth disappointingly flat

The Employment number is just a number. It's the trend that matters. That being said, today's numbers are quite a shock.

Nonfarm payrolls increased by 1,000 in December, far below forecasts.

Job growth in the previous four months was revised lower by a total of 66,000. Over the past five months, payrolls have increased by 278,000, according to the survey of some 300,000 business establishments.

The separate household survey showed employment fell by 54,000 in December to 138.5 million. Unemployment fell by 255,000 to 8.4 million, the lowest since October 2002. The labor force decreased by 309,000.

The weak labor market is holding down pay increases. Average hourly earnings rose 0.2 percent to $15.50. Over the past year, earnings are up 2 percent, the lowest year-over-year gain since 1987.

Poor weather during the survey week may have depressed the workweek. The average workweek dropped by 12 minutes to 33.7 hours, while hours in manufacturing fell by 6 minutes to 40.7 hours despite a 6-minute increase in overtime to 4.6 hours.

Total hours worked in the economy fell 0.6 percent.

Hiring weakened in December after job gains of 43,000 in November and 100,000 in October. In December, 50.4 percent of industries were hiring, down from 54.3 percent in November.

Goods-producing industries cut 12,000 jobs, including 26,000 in manufacturing. Hopes had risen among economists that the long drought of hiring in the factory sector might finally be ending after the employment index of the Institute for Supply Management index hit a three-year high.

Services-producing industries added 13,000 jobs. Retail jobs fell by 38,000, as cautious retailers kept staffs lean heading into the holiday season. Fewer hires in November and December will likely mean fewer layoffs than expected in January, which could boost the seasonally adjusted data.

Professional and business services added 45,000 jobs, including 30,000 temporary help workers. Health services added 14,000 jobs.

The average length of unemployment fell to 19.6 weeks in December from 20 weeks in November. Of the 8.4 million counted as unemployed, 1.9 million or 22.3 percent have been out of work longer than six months.

I see the unemployment number pegged at 5.7%. I think you'll see a downward revision here.

Much of the data is troubling. Wage and hours worked are cause for concern, as is the sheer size of the 'employment miss.'

Of course the data do not include the large number of Americans that are no longer seeking work, but does give a rough idea of the strength of the job market as reflected in the earnings report, and the hours per week worked.

In case you're wondering where all of this data is mined from, see the U.S. Dept. of Labor's Employment Situation tables and summary.

I just peeked at the opening on Wall Street and it appears that in reaction to the jobs report, the major indices are approximately .75% lower.

I'm sure that the employment numbers will be very closely monitored after today's weak showing. The shocking weakness in the employment report is likely to keep the Fed from moving rates at their next meeting..expect the January 24 release notes to read like the following:

"The Committee continues to believe that an accommodative stance of monetary policy, coupled with robust underlying growth in productivity, is providing important ongoing support to economic activity. The evidence accumulated over the intermeeting period confirms that output is expanding briskly, and the labor market appears to be improving modestly. Increases in core consumer prices are muted and expected to remain low.

"The Committee perceives that the upside and downside risks to the attainment of sustainable growth for the next few quarters are roughly equal. The probability of an unwelcome fall in inflation has diminished in recent months and now appears almost equal to that of a rise in inflation. However, with inflation quite low and resource use slack, the Committee believes that policy accommodation can be maintained for a considerable period."

In simple terms, no change in bias or rate movement at this time.

On Edit: The dollar is trading at yet another all time low vs. the Euro.