'The Great Resignation' continues as we start off 2022, but the recent job numbers report from the U.S. Labor Department wasn't all bad. In this segment of Backstage Pass, recorded on Jan. 7, Fool contributors Toby Bordelon and Rachel Warren discuss some of the most compelling stats investors should know.
Toby Bordelon: A report from the Labor Department released this morning highlighting some news, I've seen different presentations, some are presenting this as a negative thing, some are presenting it in a positive light.
I want to know what you guys think. But the gist here is non-farm payrolls grew by 199,000 in the month of December.
That was actually well short of estimates, 422,000 were what some people were looking for, so 50% less right there.
But at the same time, we got the unemployment numbers were better-than-expected, 3.9% versus 4.1%
What do we think about this? What do these job numbers mean? What does it mean for the economy? What does it mean for the future? Let's start with you, Rachel. What do you think here, what's your take?
Rachel Warren: I thought this was really interesting and I don't see it as a negative thing, the numbers that we saw today, and I'm going to try to explain why.
I honestly think by this point, no one's very surprised when the actual number of non-farm payrolls falls a bit below the estimate.
I think we've been seeing these trends for a really long time. I don't think that that is going to just abate as we go into the new year, I think it's going to be more of a gradual righting of these numbers.
But I do think one very positive aspect to note is that we are still seeing the unemployment rate drop.
And while these non-farm payrolls are coming in well below expectations in terms of what the projections were before, we're still seeing unemployment go down. That could be due to a lot of different factors that we've been talking about on the show for months now.
We know that baby boomers are retiring, we know that people are quitting their jobs still at record rates for a variety of reasons, often so they can find more flexible work, we know that the freelance and the contractor economy is booming, the gig economy is exploding.
I think we're seeing that a lot of workers are transitioning over there and we know that workers in that space are not counted in the traditional payrolls that are coming out every month. I think that's something that's interesting to note.
Another thing that surprised me, I saw this report from Reuters, it was saying, "the below-expectations job gains in December likely reflect labor shortages," which isn't really all that surprising, "as well as anomalies with the so-called seasonal adjustment used by the government to strip out seasonal fluctuations from the data".
One thing that really stuck out to me from this report that Reuters noted was that people who are out sick or in quarantine and do not get paid during the payroll survey period are counted as unemployed even if they still have a job with their employers.
Some of these numbers we could be seeing, you might be having people that are actually still very much in the workforce, they haven't retired, they haven't lost their jobs, they haven't moved to freelance work and maybe they got COVID, or for some other reason are out sick for a while, and apparently, that's not something that is being differentiated in the jobs report.
Those are some of the factors I think we're seeing. In terms of the more positive side of things here, I think the fact that the unemployment rate is dropping is really great.
One of the things I noted from this report was that we are seeing areas where job creation is growing in the same sectors where job quits were really falling a few months ago.
For example, CNBC noted that job creation was highest in the leisure and hospitality sectors which added 53,000, professional and business services contributed 43,000, while manufacturing added 26,000.
We're seeing some of these areas where workers were quitting at record rates, and in some cases may still be, but they are starting to see a gradual recovery, which I think should be encouraging to people that are looking at these numbers with a little bit of maybe confusion. Other areas like transportation, wholesale trade, and construction are also continuing to see really strong growth.
I think it's a combination of people switching to different careers, people retiring, people perhaps choosing more flexible work options. But there is very much signs of recovery and I think that's something positive to focus on.
