Major Rebound in Office Employment

Economic Pulse
January 8, 2016
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Nonfarm payroll employment increased by 292,000 in December, well ahead of consensus estimates for a 200,000 gain, as the household unemployment rate held steady at 5.0 percent. Job gains were aided by unseasonably warm weather, which led construction jobs higher by 45,000 for the month and 128,000 for the quarter (vs. just 32,000 in Q3 2015.) Upward revisions for October and November increased the tally by an additional 50,000.

Office employment rebounded sharply from what had been a weak November, rising by 100,000 (Table 1 and Chart 1). Employment in financial activities rose by 11,000, with more than half the gain coming from the insurance sector. Information jobs swelled by 16,000, reversing a contraction in November, as film and sound recording jobs rose by 15,000. However, it was the 73,000 gain in professional and business services that was responsible for the bulk of the monthly increase, led by a surge of 34,000 additional temporary help services workers. This sector has been somewhat volatile; after rising by 35,000 in October, the ranks of temporary help services workers contracted by 12,000 in November, only to rebound in December.

Monthly Change in Office-Using Payrolls by Category (000s, SA)Chart 1. Office-Using Employment and Total Payrolls, December 2007 – December 2015 (Seasonally-Adjusted, 000s)

Despite the advance in office-using employment and payrolls generally, there is little evidence of widespread wage pressures. Average hourly earnings were unchanged on the month, and have risen by just 2.5% on a YoY basis. Despite the growth in payrolls, average weekly payrolls—the product of average hourly earnings, average weekly hours and employment—has been fairly steady; quarterly annualized growth in Q4 2015 was just 4.6%--right in the middle of the average over the last two years (Chart 2). Payroll growth has been robust, but without a corresponding increase in wages, consumption growth is likely to remain in its recent range.

Chart 2. Index of Aggregate Weekly Payrolls and Core Retail Sales, QoQ % Changes Annualized