- Category: NFIB
- Published: Monday, 21 January 2013 09:56
- Written by William C. Dunkelberg, Chief Economist, National Federation of Independent Business
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"Job creation in December was essentially zero, although it improved infinitesimally from the November report—but it's nothing to write home about and certainly not a sign that robust growth is on the horizon.
"The average change in employment per firm increased to 0.03, up from -0.04 workers, with 11 percent of surveyed owners (up 1 point) reporting they added an average of 2.9 workers per firm over the past few months, and 13 percent reducing employment (up 2 points) an average of 1.9 workers (seasonally adjusted). The remaining 76 percent of owners made no net change in employment. Forty-one percent of the owners hired or tried to hire in the last three months and 33 percent (80 percent of those trying to hire or hiring) reported few or no qualified applicants for open positions.
"Sixteen (16) percent of all owners reported they had hard-to-fill job openings, a drop of 1 point from the previous month. This measure is highly correlated with the unemployment rate, so the NFIB survey anticipates little change in the rate.
"If there is any news in the numbers, it's the substantial weakening of job creation plans, which fell 4 points, indicating that only (a net) one percent of owners plan to increase employment in the months to come. Not seasonally adjusted, seven percent of owners plan to increase employment at their firm (down 4 points), but 11 percent plan reductions (down 2 points).
"The plunge in job creation plans and the decline in job openings likely reflect the pervasive frustration with Washington policy and the resulting economic uncertainty that peaked in December as Congress took us right to the edge of 'the cliff.' With the debt/deficit still a persistent problem, and states and cities struggling to fulfill all of the promises politicians made but did not fund, January is expected to bring disappointment, as most observers expect the beginning of the New Year to be sluggish. The cliff deal did bring some certainty about tax rates and extenders for another year, but the health care act and EPA regulations are now pouring out, providing little comfort about the course of future costs. If the unemployment rate falls, it is likely to be due more to demographics than new job creation which will not be strong, since holiday consumer spending failed to deliver the surge many had hoped for.
"We may have some certainty, but there is little reason to be hopeful. Happy New Year."