Jason Stipp: I'm Jason Stipp for Morningstar. The government released its December unemployment report today, and it was disappointing for a lot of market watchers. 85,000 jobs were lost, while many were expecting that perhaps we might even see some job growth over the last month. Here with me to dig into the numbers is Morningstar's Bob Johnson. He's associate director of economic analysis. And Vishnu Lekraj. He's an equity analyst in the employment sector. Thanks for being here, guys.
Bob Johnson: Thank you.
Stipp: So we talked yesterday about what you were expecting. And there was some hope there, but you guys also said, "Look, there's a range where this number could fall." And it certainly fell on the more disappointing side of that range. Are these numbers really a big disappointment? Do you think this is something we should worry about? Is it a setback?
Johnson: I don't think it's a big setback at all. I think you've got to put it all in perspective, where we came from job losses of near 750,000 at the peak, and now we're somewhere near zero. And I think, really, if you look at 138 million or whatever people that are in the workforce or working, that the number of people in the 100,000 each month in jobs gets to be a measurement issue. Does it really mean all that much?Read Full Transcript
And psychologically, I'm disappointed because I was hoping for a growth number, and it'd make the consumer more excited, and he'd spend a little bit more and feel more confident about his job. So I'm disappointed, from that standpoint, that we didn't have a growth number. Although we did get a growth number for November, I'll point out. We actually showed job growth in the month of November...
Stipp: The revised number.
Johnson: ...with all the revisions.
Stipp: Right. So, psychologically, perhaps, disappointing, but in reality, maybe not so much. So give us some context, Vishnu. Is this something that should be disappointing if you look over time?
Vishnu Lekraj: I don't think so at all. I'm actually pretty happy with the report. I'm not overly excited about it, but I'm not overly depressed. And I think Bob made a good point. It was expectations that everyone was disappointed with: the expectations they had for job growth weren't fulfilled. But if you look over the last quarter of '09, the average job loss was only 70,000. That's October, November, and December. When you take into consideration the first quarter of '09--January, February, March--we had 700,000 jobs lost.
So, all in all, we're improving. I think the market needs some patience. I think investors need to relax here a little bit. It takes time for a big economy like ours, a complex economy, to go ahead and start to really grow.
Stipp: Sure. So let's dig into the numbers a little bit here and figure out what actually accounted for some of these losses. As you look at the underlying sectors, what were you seeing there, Bob?
Johnson: Sure. I mean, the big disappointment this month was on the construction side. That number was clearly a number that had been getting better. And we had a very good November in construction, probably because the weather was so good. And then December was really a bad weather month. So the construction numbers were really one of the most disappointing numbers in the whole release, so that was a bad number.
And the other really bad number in the report was government. We lost 22,000 government jobs. With all the stimulus money we've been spending and all that's going on, one would think that at least we'd get that number stabilized. But the government actually lost 22,000 jobs, after several months of growth, so that was a big disappointment.
I don't know if you want to comment a little bit on what you saw on the services side of the house.
Lekraj: Right. Services, actually, was very good. We saw temporary help here add some more jobs, which is consistent with what had over the past three months. A very good sign, again. Like I said, that's a leading indicator within the employment market.
Financial services. We had a discussion about this not too long ago. And we had job growth within this sector for the first time in a while, which is very exciting. So, we had some depressing numbers from the goods-producing sector, but the services sector really was the star this month.
Stipp: And so the temporary-help services, in particular, seeing some added jobs there is a nice leading indicator of things to come, perhaps.
So, one of the things that, when I was looking over the numbers, I wrote down, a lot of the report was saying that it was about the same, that there was very little change, things are sort of status quo from where they were in December. It feels like we're in a holding pattern in the employment market. How long do you think we're going to be here, and how long are we going to have to sort of stick with this 10% unemployment, and what are you looking at that might suggest some change on the horizon?
Johnson: Sure. Well, I'm hopeful, even looking into January and February. December's always kind of a tough month, because you haven't got people around to do the interviewing. People are worrying about other things than hiring people. And plus, usually, in December, you don't have the budget to hire people yet. You've got this thing and you've got a headcount, but you can't move it up until you move into January. And so I'm thinking that January may look a little better.
December's always a dicey number. There are supposed to be seasonal adjustment factors that capture all of that in our numbers, but I don't think they ever work exactly right, and so I'm looking for January to be a little bit better. Obviously, we're still going to be hurting on the construction side of the house. That's going to be the biggest negative draw for us. But we'll have to see how it moves forward next year.
Stipp: Vishnu, what are you looking at that might suggest we have some more hope on the horizon?
Lekraj: Right. I had a staffing report on Wednesday, Resources Global, ticker RECN, and they have a metric called the "bill-pay spread". And what that means is that they bill their customers and pay the temporary workers. And when that spread starts to widen, in terms of them getting more money from their customers and paying less money to their workers, that usually means we're into pretty much a bottom in terms of job losses. And I saw that on Wednesday and I was very excited about that.
But, again, like I said, I think job growth here is going to be pretty much slow--I just want to reiterate that--over the next quarter or so, and probably won't see any robust job growth until the end of 2010.
Stipp: So, ultimately, not a huge disappointment this time around. Have some patience, and there are some good signs on the horizon.
Stipp: Thanks so much for your insights and joining me today, guys.
Lekraj: Thank you.
Johnson: Thank you.
Stipp: For Morningstar, I'm Jason Stipp. Thanks for watching.