Holiday Shipping Causes Payroll Havoc, Credit Suisse Says
Increases in online holiday shopping that have spurred the hiring and firing of thousands of express delivery workers is playing havoc with U.S. payroll data, and indicates employment will rebound in coming months, according to economists at Credit Suisse.
Employment at courier and messenger services, which include workers at companies like FedEx Corp. and United Parcel Service Inc., plunged by 45,000 in January after climbing by 46,000 the prior month, according to figures from the Labor Department. The swing in that one category, comprising 0.4 percent of all payrolls, accounted for all the slowdown in employment last month, and then some.
"It's eye-popping to think that such a small industry moved the whole payroll count," Jonathan Basile, a Credit Suisse economist in New York, said in an interview. "That tells you that there are seasonal factors at work that the Labor Department hasn't been able to adjust. Think of the ways holiday shopping has changed over the years. The government's adjust process is a slow-moving vehicle."
Basile said government statisticians would likely take several years to take the new hiring pattern into account.
Sales at non-store retailers, which include internet merchants, climbed 2.6 percent in December, the most since April 2008, to a record $32.3 billion, according to figures from the Commerce Department. In a Dec. 16 call with analysts, FedEx said it had its busiest day on record three days earlier, and Chief Executive Officer Fred Smith said more than half of last year's volume increase during the peak period was due to online retail and catalog shipments.
Total payrolls climbed by 36,000 workers last month, short of the 146,000 median forecast of economists surveyed by Bloomberg News, after a gain of 121,000 in December. Excluding couriers and messengers, employment would have climbed by 81,000 after a 75,000 December increase.
Basile, who wrote a research note about payrolls to clients yesterday, said he would estimate an 80,000 gain in February payrolls as a starting point for Credit Suisse's forecast next month, before adding increases in other categories.
Employment last month was "out of step" with other measures of the economy, including business surveys and profits, that point to a pickup in hiring, Basile said. "You are building a case for a payroll number that is not just a little better than January, but one that is a lot better," he said.