The reporting on the November jobs report was remarkably positive. This was the result of misreading the meaning of some of the data. Starting with the raw numbers, the 94,000 job gain is mediocre at best. If sustained, it would imply rising unemployment. However, the number of jobs created over the last two months was revised down by 49,000 in this report, meaning that we only have 45,000 more jobs in November than we thought we had in October. Job growth over the last four months has averaged 100,000, with private sector growth averaging just 66,000. Even this could be somewhat of an overstatement. The birth/death imputation for new firms not captured by the survey has been running slightly higher than it did for the same months last year. The benchmark revision, based on unemployment insurance filings, showed that we were overstating job growth last year by 300,000 or 25,000 per month. If the economy is growing no faster this year, then job growth would be overstated by at least as much. The wage growth data is also far less encouraging than reported. While the increase of 8 cents an hour in the average hourly wage implies a 0.5 percent increase for the month, this number came with downward revisions to growth for the prior two months. Comparing the last three months with the prior three months, wages have been growing at just a 2.9 percent annual rate. This is a full percentage point less than their growth rate earlier in the year and almost certainly not fast enough to keep pace with inflation. You can get the full story here.
--Dean Baker