December was expected to be a weaker month than October and November, as a result of the double-whammy of the post-hurricane rebound ending and an adverse winter storm effect, but virtually nobody on Wall Street expected the 3-sigma outlier December payrolls report to be as poor as it was.
So which sectors were responsible for the sharp slowdown in the December jobs growth rate, in which only 148K jobs were added, far below November’s 252K, and the estimate of 190K?
As has been the case for nearly a decade, much of the job growth in December took place among minimum-wage job categories, although, in December somewhat surprisingly, construction was the best performing category, adding some 30,000 jobs and a continuation from the strong performance last month, with most of the increase among specialty trade contractors (+24,000); at the same time, some 25,000 high-paying manufacturing jobs were also added.
At the same time the low-wage staples of leisure & hospitality and education and health both added 29K and 28K respectively. Employment in health care increased by 31,000 in December; employment continued to trend up in ambulatory health care services (+15,000) and hospitals (+12,000)
Employment in professional and business services rose by 12,000 while temp-help jobs increased by 7,000, a big jump from November’s 1,000.
That old faithful – waiters and bartenders – added a solid 25,000. Over the year, employment in food services and drinking places added 249,000 jobs, about in line with an increase of 276,000 in 2016.
But the biggest surprise of all took place in December, however, was the big drop in retail trade, which tumbled by over 20,000 jobs.
Finally, as Bloomberg shows, below are the industries with the highest and lowest rates of employment growth for the most recent month: monthly growth rates are shown for the prior year.
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