Working Thoughts

Here are the job market and compensation numbers for January of 2008:

Net loss of 17,000 jobs in the month (revised to a loss of 76,000)

• If this number holds up in revisions, it is the first month to post a loss of jobs in four years
• December was revised up from 18,000 to 82,000
• Forecasters (economists) predicted a gain of 70,000 jobs

Unemployment rate moved to 4.9%

• Forecasters thought unemployment would remain at 5.0%
• The private sector only increased by 1,000 jobs in the month

Wages were up 0.2% for January

• Wages were up 3.7% for all of 2007, this is slower than inflation
• 2006 saw an increase in wage of 4.3%
• Inflation for 2007 was 4.1%, up from 2.5% in 2006
• Over the last 12 months, the salaried worker has in essence seen their pay decrease
• The number of hours employees work has declined from 33.8 to 33.7
• With the number of hours reduced and 4 cent increase in wages means that weekly wages dropped for the first time since April

$17.75 is the average hourly wage

Inflation:

• Inflation for 2007 was 4.1%, up from 2.5% in 2006
• This is higher than what the Fed would like to see – 1% to 2%
• Prices in December alone rose 3.5% from a year ago

Consumer Spending:

• December saw an increase in spending of 0.2%
• Adjusted for inflation, that is a flat month for spending
• November saw an increase of 1%
• New orders by business owners dropped to the lowest rate since May of 2003
• Personal income increased by only 0.5% in December
• Since December of 2006, disposable income (after tax salary and adjusted for inflation) has increased by 2.1%

The Chinese Impact:

• 7.5 of American spending on consumer goods is from China
• Chinese exports increased 2.4% over 2007, but that 2.4% creates a snowball effect where it increases the cost of everything else, from competitors goods, to the consumption of energy and food
• Chinese exports account for 80% of toys, 85% of footwear, and 40% of clothing
• Because of a combination of factors, the cost to American consumers for these items might increase by 10% this year
• The cost of certain types of plastic has risen by more than 30% – blame oil and its consumption
• The dollar is down about 7.6% against the yuan and can drop further in the next year
• Chinese factors don’t publish this number, but it is speculated by experts that wages in Chinese factories have increase 80% or more in certain parts of China
• The lowest month income for a factory worker is now $125 (in certain parts of China)
• Chinese factories for 2009 orders are increasing their prices by 20% to 50%

Other information:

The 2007 review by the government was completed in January and it found a drop in jobs by 191,000.

Recent Job Reports:

December 2007 Job Report Stats
November 2007 Job Report Stats
October 2007 Job Report Stats
September 2007 Job Report Stats