Last Friday's employment report (December 4) was yet another one that looked great on the outside, but no so good when you opened it up. There was lots of excitement about payroll employment up +211,000, exceeding expectations, plus revisions to prior data. The household survey, which we prefer because it includes self-employment, does not double count workers with multiple jobs, and is the report used to calculate the unemployment rate, increased by +244,000 workers.
Yet, the number of full time workers increased by only +3,000. The number of full time workers has been flat since since August.

The unemployment rate held steady at 5%. The U-6 rate, which includes discouraged workers, rose from 9.8% to 9.9%.
These are the changes to employment that have occurred since November of 2014:

  • The civilian labor force has increased by +899,000 and is now 157,301,000 (+0.57%).
  • The number of employed has risen from 147,331,000 to 149,364,000, an increase of +2,033,000 (+1.38%).
  • The fact that the labor force is not increasing at the same rate as population keeping the unemployment rate at levels typically experienced in healthier economies, sending a flawed signal of health to the markets. The unemployment rate has fallen from 5.8% to 5.0%.
  • The labor participation rate has fallen from 62.9% to 62.5%, and is the lowest since the late 1970s.
  • The employment-to-population ratio is also low, at 59.2%, and has improved only slightly to 59.3% since last year.
  • The number of unemployed has decreased from 9,071,000 to 7,937,000, a decrease of -1,134,000 (-12.5%); this is good news, but many of these workers have exited the workforce.
  • The number of workers no longer in the labor force is now 94,446,000, an increase of +2,004,000. This number is often cited by economic critics because of its sheer size, but it includes newly retired and others who have completed their work careers for other reasons. Many of these workers would return to the workforce if their circumstances change or if the economy was stronger.
  • The number of workers who are part time for economic reasons has decreased by -765,000 and is now 6,086.000. These include workers whose hours have been cut because of slow work conditions.
  • The number of part time workers who have those hours for noneconomic reasons (such as family situations or attending school) has increased from 19,971,000 to 20,157,000, and increase of +186,000.
  • The number of full time workers has increased since last year by +2,520,000. This is larger than the increase in the number of total workers since the last year. The number has stagnated since August, up only +3,000, and is at 122,027,000. It is up only by +152,000 in the eight years since the start of the recession. That's an annual average increase in full time workers of +19,000.
  • If the number of full time workers had grown by 0.5% per year, a little more than half of the population growth rate, the number of full time workers would be in the range of 126,835,000. This cautious back-of-the-envelope calculation indicates that the economy is short about -4,800,000 full time jobs.

Commercial Printing Shipments Rise (Again)
Printing industry employment is continuing to decline while shipments are rising. This has led to an increase to a historical high in the key metric of shipments per employee.
Commercial printing had its seventeen month of current dollar increases, and is growing at a rate faster than real GDP. Let's hope the Commerce Department estimates are correct (we'll find out in May). On an inflation adjusted basis, it's 16 out of 17 months, and the month that it did not exceed the prior year was by such a small amount it's worth ignoring and giving the industry a Mulligan.

On an inflation-adjusted basis the industry has not had this kind of streak since the mid-1990s. On a current dollar basis, the average monthly growth rate has been +3.3% during this period, and +2.5% after adjusting for inflation. This is in line with GDP growth and depending on the quarter, exceeds it.

The chart shows how shipments have outpaced 2014 levels for the first 10 months of 2015. October shipments were $7.729 billion, up +$204 million compared to 2015 (+2.7%). 

Printing Employment Shrinks, Content Employment Rises (Again)
Employment has been contracting. It's down about -1.1% since last year. The number of people employed has increased slightly of late, but that appears to be as seasonal rise that will reverse shortly. Even though shipments have been rising, profits have not, mired at the same levels for the past few quarters. We get new profits data for Q3, but it seems that printers are being squeezed on the cost side (what else is new) so employees are not being added at a pace commensurate with sales increases.

The chart below shows that print and traditional media employment are decreasing. Newspaper employment is at levels not seen since the late 1940s; periodical publishing employment is down to late 1980s levels. Content creation segments are growing stongly. Back in 2011 it was a big deal that ad agency plus graphic design employment exceeded printing employment for the first time. Now the combination exceeds printing employment by more than 100,000 workers.

Shipments Per Employee Reaches New Level
And that brings us to a keenly followed industry metric: shipments or revenues per employee. This figure jumps around a lot from month to month (the green line). The 12 month average of this number is worth examining. It peaked just before the recession at $190,000 per employee, and fell to $176,000. 

The industry was in a channel of $175,000 to $180,000 for a very long time. Falling to that level was not a big deal.
This metric has been increasing steadily since the recession-bottom and is now $193,000. The data series starts in 1992, but I believe that this is an all-time high for this figure. I have some industry data going back into the 1960s, and though not directly comparable, it's close enough for me to say that with some confidence. 

The industry is still consolidating in all its ugliness (closure and bankruptcy of businesses that no longer have value) its grandeur (sale of a thriving business to a successful new owner) and in between (tuck-ins). This means that companies respectively pick up the volume of deceased brethren, add volume to existing well-run businesses, and shift volume from marginally surviving businesses to others that run more efficiently. The surviving companies are not adding employees in the process, or if they are they are doing so at a rate of hire that is smaller than the rate of dismissals of closing establishments. 

This is a milestone for the industry and it would be nice if a rise in profits and profits per employee would rise, too. For many years the trend has been more jobs sold of smaller invoice value. This means that fixed costs are a greater percentage of selling price unless company leadership has been aggressive at managing fixed cost relevance. That means that they have been turning over their capital base to be appropriate to their marketplace now and in the future and have regularly disposed of capital that is no longer capable of producting good returns. We'll have a look at Q3 profits soon.

Oldsters are Considered Luddites Because They Prefer Tablets Over Smartphones
My how much things have changed. The Internet Advertising Bureau notes that the methods seeking information vary by age. I remember the issue being online versus print  years ago, and now the IAB research is quite different. Younger consumers use smartphones. Older consumers use tablets. 

As far as the handwringing about tablet sales not being what they used to be, the handwringing should stop. Tablets last longer in practical use than smartphones, so that should not be unexpected. Smartphones are getting more powerful, their screen size is increasing, and they're getting cheaper to own. Smartphones are small tablets. Laptops are becoming tablets with detachable keyboards. 

Platform matters little: everyone is connected and the reliance on immediate access in convenient ways will always be improving. What's convenient for the information seeker and user creates a communications challenge for the content creator because it increases the number of formats and venues that need to be supported. While there are software programs that can help manage that, you still have to manage and optimize content. That's where the opportunity is for printers, marketing service providers, and others. That content often needs to take physical form in displays, signage, mail, and other offline ways.

The more fluent print marketers are in media, the deeper and broader their client relationships can be.