“Davidson” submits:
The Establishment Survey reports a 216,000 increase as the Household Survey reports a decline of 683,000, reversing most of last month’s reported gains. Each series has its own volatility with Establishment revisions of past reports occurring with every current report and the Household not revised but for major population base adjustments (coming in February) leaving any revisions to be handled in the next statistical sampling period. This can leave the Household data looking decidedly choppy. Nonetheless, what matters is the trend not any individual report and the employment uptrend continues which is a positive for core economic issues and equities in general. This also supports rising rates as capital shifts to buy equities to catchup as earnings expectations rise.
The trend in self-employed, the difference between the Household vs the Establishment series, is clearly lower as labor demand continues to be pressured by economic demand. Of note, remaining like a sore-thumb, is the very low Vehicle Sales SAAR with December’s 15.7mil. This continues to reflect supply chain issues with China. It is reported that 40% of parts for Honda and Toyota are sourced in Chinese factories and a major shift to unsnarl this has been ongoing. The dealer inventories of the more popular vehicles are reported at less than 10 days with 60 days of inventory pre-COVID deemed normal. This leaves us with 24,000,000 more individuals working today vs Feb 2020 when Vehicle Sales SAAR were 2 million higher, ~17.5mil SAAR. The demand for employees continues to place upward pressure on the demand for personal transportation especially in rural communities where new factories are being located to offset supply chain issues.
Net/net, we should expect the uptrend in employment to continue with investors eventually recognizing this trend as positive for equities.
Excerpt from today’s report:
“Total nonfarm payroll employment increased by 216,000 in December, and the unemployment rate was unchanged at 3.7 percent, the U.S. Bureau of Labor Statistics reported today. Employment continued to trend up in government, health care, social assistance, and construction, while transportation and warehousing lost jobs.”
