PRINCETON, NJ -- Although there is a lot of optimism about Friday's December jobs report, if it shows the first positive number in two years, as some hope, it may create euphoria on Wall Street. But this has yet to be reflected on Main Street. Â鶹´«Ã½AV's Job Creation Index -- based on U.S. employees' self-reports of hiring and firing activity at their workplaces -- shows that job-market conditions nationwide actually deteriorated in December. Still, conditions did vary significantly by region, with the East experiencing a sharp improvement and the West a modest improvement compared to November, while things deteriorated in the Midwest and the South.
"All in all, Â鶹´«Ã½AV's Job Creation Index shows job conditions in the East are the best in the nation; the region has the highest hiring rate and the lowest firing rate."
Nationwide, job-market conditions have stabilized, as Â鶹´«Ã½AV's Job Creation Index has been at 0 or +2 in each of the past four months -- an improvement from the negative conditions of the first eight months of 2009. This improvement has been largely owing to a reduction in the percentage of employees who say their companies are letting people go; new hiring has remained relatively anemic. As a result, current job-market conditions, as employees nationwide perceive them, are about the same as they were a year ago.
East: Best Job Conditions
Job-market conditions in the East improved significantly in December, to +5 from November's 0. Hiring improved, with 26% of workers reporting that their employers are hiring new employees and expanding the size of their workforces -- up from 24% in November. At the same time, 21% say their companies are letting people go -- an improvement from November's 24%. All in all, Â鶹´«Ã½AV's Job Creation Index shows job conditions in the East are the best in the nation; the region has the highest hiring rate and the lowest firing rate. It seems that the recovery of the financial sector and the sharp gains on Wall Street have led to a substantially improved job market in this part of the country.
Midwest: Conditions Deteriorate
Midwestern job-market conditions deteriorated in December after remaining stable and positive for the prior three months, as Â鶹´«Ã½AV's Job Creation Index fell to -3 (from +1 in September through November). The percentage of companies hiring fell to 22% (from 24%) while the percentage letting go increased to 25% (from 23%). Midwest job-market conditions may be reflecting the end of the lagged benefits that the bailout of the nation's domestic auto producers and the "cash for clunkers" program have produced -- and seasonal hiring patterns may also play a part. January job conditions in the Midwest should illuminate this further.
South: Less Positive in December
Job-market conditions in the South also deteriorated in December, as Â鶹´«Ã½AV's Job Creation Index there fell to +1 from +7 in November and +6 in October. Hiring fell to 25% in December (from November's 27%) while layoffs increased to 24% (from 20%). Over the previous couple of months, the South had shown the best hiring picture and fewest layoffs of any region. December's decline probably reflects some of the cutbacks in refining and related gas and oil activities -- but this jobs situation could turn around once more as oil prices have surged past the $80-a-barrel mark.
West: Modest Improvement
Â鶹´«Ã½AV's Job Creation Index in the West improved to -2 from -4 in November. Essentially matching the Midwest, 22% of employees say their companies are hiring while 24% say they are letting people go. Job-market conditions in the West continue to suffer from weak housing markets in many parts of the region. And this region joins the Midwest as having the weakest job market in December.
Commentary
The countdown to Friday's December jobs report has started on Wall Street, with the bulls ready to celebrate what may be the first positive jobs report (establishment survey) in two years. In November, the nation lost 11,000 jobs, and the consensus is that the country may not have lost any jobs or may even have had a slight gain last month. While the real improvement in job growth may not be meaningful, there could be a major positive psychological benefit from even a slightly positive number.
At the same time, there might also be a positive impact if the unemployment rate declines from November's 10%. Â鶹´«Ã½AV's modeling -- based on its Job Creation Index -- suggests this will not happen, however, with the best estimate being that the government's unemployment rate will increase to between 10.1% and 10.3%. The consensus forecast for December increased from 10.0% to 10.1%, matching the Â鶹´«Ã½AV estimate, after Wednesday's ADP and Challenger, Gray, & Christmas jobs reports. Still, seasonal adjustments could create a surprise to either the upside or the downside in December.
Regardless of the actual numbers reported in December's unemployment reports, Â鶹´«Ã½AV's continuous monitoring of employees' perceptions of the jobs market suggest that while layoffs have eased considerably, there has been virtually no improvement in job creation during recent months. Only after a significant increase in job creation will Main Street be able to join Wall Street in euphoria over jobs.
Survey Methods
For Â鶹´«Ã½AV Poll Daily tracking, Â鶹´«Ã½AV interviews approximately 1,000 national adults, aged 18 and older, each day. The Â鶹´«Ã½AV consumer spending results are based on random half-samples of approximately 500 national adults, aged 18 and older, each day. The Â鶹´«Ã½AV Job Creation Index results are based on a random half sample of approximately 250 current full- and part-time employees each day.
Regional results for December are based on Â鶹´«Ã½AV Poll Daily tracking interviews totaling more than 1,700 in all regions. For the total regional samples of these surveys, one can say with 95% confidence that the maximum margin of sampling error is ±3 percentage points.
Interviews are conducted with respondents on land-line telephones (for respondents with a land-line telephone) and cellular phones (for respondents who are cell-phone only).
In addition to sampling error, question wording and practical difficulties in conducting surveys can introduce error or bias into the findings of public opinion polls.
