Weakness in Labor Market Continues
BLS leads with this paragraph:
Both nonfarm payroll employment, at 138.1 million, and the unemployment rate, at 4.9 percent, were essentially unchanged in January, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. The small January movement in nonfarm payroll employment (-17,000) reflected declines in construction and manufacturing and job growth in health care. Average hourly earnings rose by 4 cents, or 0.2 percent, over the month.
Chris Isidore elaborates on this payroll survey figure as he claims this was a surprise:
NEW YORK (CNNMoney.com) – Employers trimmed jobs from their payrolls in January, according to a government jobs report Friday that showed the first decline in employment in four years. That raised new concerns about the risk of recession for the weakening U.S. economy. There was a net loss of 17,000 jobs in the month, according to the Labor Department reading. That was partly balanced by a sharp revision higher for the December reading to a gain of 82,000 jobs from the original reading of only an 18,000 increase. Economists surveyed by Briefing.com had looked for a gain of 70,000 jobs for January. The figures showed January as having the first decline in payrolls since August 2003. But the drop was based on the preliminary reading, which is subject to revisions. There have been a few months in the last four years, including August 2007, when the preliminary payroll reading showed a decline was later revised to a gain.
Whether payroll employment is falling or only increasing quite slowly is therefore a bit murky. Chris notes the fall in the officially reported unemployment rate from 5% to 4.9% and then notes:
The drop in the unemployment rate, which is based on a different survey than the one used to calculate U.S. payrolls, was partly due to updated population figures used at the start of the new year.
Total employment and the employment-population ratio edged up in January after accounting for the annual adjustment to the population controls. The civilian labor force also rose when adjustment is made to account for the effect of population control changes. The labor force participation rate (66.1 percent) was about the same as in December.
While the officially reported employment increase per the household survey was a mere 37,000, the employment-population ratio was from 62.7% to 62.9% and the labor force participation rate rose from 66% to 66.1%. So this month’s household survey is giving a somewhat different picture than the one given by the payroll survey. We should keep in mind, however, that the employment-population rate as of December 2006 was 63.4% so the latest 62.9% still looks quite weak by comparison.
Update: Greg Ip and Kelly Evans note:
But the separate household survey showed a whopping increase in employment of 635,000, when new updated population controls are applied to both the December and January data. (NOTE: Don’t be fooled by the 37,000 increase in household employment implied by the raw seasonally adjusted data for December and January; those figures use different population controls.) In December, just the opposite occurred: nonfarm payrolls rose a respectable 82,000, upwardly revised from the initial estimate of just 18,000. But that month, household employment plunged 436,000.The household survey’s signal of strength was ratified by the unemployment rate, which dropped to 4.93% from 4.98%. The employment to population ratio jumped to 62.9% from 62.7%. These ratios are more reliable than the absolute numbers for employment and unemployment which are whipped around by the small sample size; they suggests a marginal improvement in the labor force.
These household survey numbers do tend to be quite noisy. Looking over the past two months, it would seem the adjusted household survey measure shows an average increase of only 100,000 new jobs per month, which is why the employment-population ratio is now a tad below where it stood in November 2007. But something tells me that some White House cheerleader (maybe writing for the National Review) will tell us how reliable the household survey figures are as (s)he notes the big increase this month forgetting to tell us about the big decrease last month.