If you keep up with economic data, you might recall that preliminary figures for payroll employment and retail sales were weak in December. Seasonally adjusted payroll employment was up just 199,000, the weakest growth of 2021. The second-slowest month for payroll job growth in 2021 was November. Seasonally adjusted retail and food service sales fell 1.9%, which was the largest monthly decline since February 2021.
Based on those two data points, you might be worried about the economy, and, indeed, they are not great numbers. However, neither is as troubling as it appears.
Although payroll growth was weak, the labor market showed considerable strength in other respects. The Bureau of Labor Statistics uses two separate surveys to gather data for its monthly employment situation report. Payroll jobs data comes from “establishment survey,” which collects data from employers. Figures on unemployment, labor participation, and total employment and unemployment come from the “household survey,” which collects data directly from individuals.
Although payroll employment was up just by just 199,000 in December, total employment as measured by the household survey rose by 651,000. Payroll jobs had risen by just 249,000 in November, but total employment surged by more than 1 million.
The economy is seeing solid job growth — but it’s happening outside of payroll employment. Other data supports this conclusion. For example, job openings (unfilled positions) in November were down only slightly from the near-record level posted in October, but job quits in November were the highest on record at 4.5 million. The latter phenomenon is what has been dubbed “The Great Resignation.” Many people are quitting payroll jobs to set up their own businesses or work as independent contractors. Monthly business application data released by the Census Bureau reflects this phenomenon, too. We’ve been seeing similar entrepreneurship in trucking with the ongoing surge in new trucking companies.
Retail Sales and Seasonal Comparisons
In retail sales, unprecedented consumer stimulus and supply chain challenges disrupted consumer buying patterns in 2021. Retail sales have been running at near-record levels. In December, seasonally adjusted sales were 19.2% ahead of the pre-pandemic month of February 2020. So even if we just consider seasonally adjusted data, retail sales in December remained extraordinarily strong, even with the month’s sharp decline.
On a not seasonally adjusted basis, retail and food service sales rose 10% to a record level in December, surpassing the record set in November. Unadjusted sales growth is always strong in December – often more than 10% – but the unadjusted level of sales in December dwarfs any prior month.
Adjusting for seasonal expectations usually helps us understand data better. But the supply chain disruptions — and consumers’ awareness of those disruptions — can distort seasonality. Widespread media reports last fall warned of holiday retail shortages, probably leading many consumers to push up purchases that otherwise might have waited until November or December. The result was a December that set a record in absolute terms but that was not as strong as would be expected given recent months’ performance and historical buying patterns.
Avery Vise is vice president of trucking at FTR. He has closely studied the transportation industry for more than 30 years as an editor, analyst, and researcher, including nearly 20 years dedicated to the trucking industry.