The U.S. economy added just 74,000 jobs in December, the lowest payrolls since January 2011. Meanwhile, the unemployment rate fell to 6.7%, its lowest level since October 2008. The decline was due to another steep drop in the labor force and the participation rate fell to 62.8%, a new low for the cycle.
Related: Job growth slows sharply, unemployment rate falls to 6.7%
Given the normal seasonal adjustments during the holidays as well as the unusually bad weather this past December -- 273,000 Americans said they didn't work last month because of the weather, the most since 1977 -- it's tempting to dismiss Friday's jobs report as an anomaly. A few big name economists were doing just that:
- "Ignore the wild payroll number, it won’t stop the Fed tapering again this month," writes Ian Shepherdson, chief economist at Pantheon Macroeconomics.
- "I wouldn't pay any attention at all to these numbers," Mark Zandi of Moody's Analytics said on CNBC. "They're not consistent with anything...GDP, ISM. Next month they'll all be revised up and revised away."
Indeed, these numbers are subject to revision. In an effort to resist the temptation to either ignore or inflate the meaning of Friday's jobs report, I aimed to focus on the long-term trends in the accompanying video with Mark Hamrick, Bankrate.com’s Washington Bureau Chief.
Most notably, the average monthly payroll growth in 2013 was 182,000 -- nearly exactly the same as in 2012. In other words, the broader trend of the job market is that it's improving, but at an insufficient pace.
"Longer term, we know the story has been 'two steps forward, one step back,'" Hamrick says. "So should we be really surprised [at December's weakness]? Not that much."
Beyond the quantity of job creation, there also has been a lot of focus on the quality of jobs created.
According to Dan Alpert, managing partner at Westwood Capital, 57% of the jobs created in the first half of 2013 were in the three lowest-paying sectors of the economy: retail trade, administrative and waste services, and leisure and hospitality.
Related: “We Have Become a Nation of Hamburger Flippers”: Dan Alpert Breaks Down the Jobs Report
Those trends started to improve in September and October, but low-wage sectors dominated in December; not surprisingly, retail led the way with 55,000 jobs added vs. the 2013 monthly average of 32,000. Worse, high wage sectors actually saw declines in December, with health care down 6,000 (vs. its 2013 average of adding 17,000 jobs per month), construction falling 16,000 and “information” down 12,000.
"The quality of job creation has been a question mark and did reappear here in this latest number," Hamrick says. "The quality has not been excellent [but] we're hoping we're turning a corner on that."
Hamrick's guarded optimism is based partially on "hiring intention" surveys, especially in business and professional services, as well as recent gains in construction and manufacturing jobs. While the former was hurt by December's harsh weather, manufacturing did add another 9,000 jobs in December "and if we see the rest of the world continuing to improve...manufacturing should improve as well" in 2014, he says.
Generally speaking, the onus remains on the optimists to show that a meaingful recovery in the jobs market isn't just wishful thinking.