Courtesy of Lee Adler of the Wall Street Examiner
The seasonally adjusted headline number for nonfarm payroll jobs added in January was 257,000. The consensus estimate of Wall Street conomists had been for a gain of 235,000. That beat of 22,000 was barely a rounding error on a total of 138.7 million jobs. The market took that to be a positive surprise. Wall Street held a ticker tape parade (at least in the morning. Having second thoughts by end of day).
Nonfarm Payrolls- Actual
Actual real time withholding tax collections, which I track in the weekly Treasury update, were very strong in January. The “good” jobs number is no surprise to those watching the tax collections.
The actual, not seasonally adjusted data shows that the growth rate has been accelerating slightly since May 2014, rising from annual growth of 1.8% to a growth rate of 2.4% in January.
This last time the annual growth rate was above 2% was at the top of the housing bubble in 2006. Like the first time claims data this suggests that the US economy, distorted by years of ZIRP and QE, may again be at bubble max. However, during the tech/internet bubble, jobs growth stayed well above 2% for more than 4 years from mid 1996 until August 2000.
That tech/internet jobs boom was driven by a technological revolution in computing and information that led to a bubble. The current jobs growth trend has seen disproportionate jobs growth in low wage service sectors. This “boom” was also helped along by a technological revolution in the extraction of oil and gas as well as an oil price bubble that further stimulated the production boom. This boom created fewer direct jobs than the tech/internet bubble, but along with the financial engineering/asset bubble, it did help to create millions of ripple effect jobs, particularly in low wage services.
Low Wage Jobs
These low wage service jobs grew by 1.2 million in the past 12 months, accounting for 38% of the total jobs growth. In contrast with that, high paid information technology jobs grew by a just one thousand jobs, according to the BLS. This is a residual of a bubble that ended 15 years ago. The housing industry has seen similar stagnation in jobs growth, a product of the last bubble. Once a bubble hits a sector, the lack of growth that follows can last generations.
The actual month to month change in total payrolls in January was a drop of -2.76 million. The 10 year average change for January is -2.9 million. The monthly change was better than the average. It was also slightly better than the drop of -2.8 million in January 2014.
Nonfarm Payrolls- Actual
The question now is, what will become of all the new jobs spawned by the oil and gas bubble, and the financial engineering/asset bubbles. That story is still to be written.
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