Friday, February 5, 2010

Unemployment Report: Reading Beyond the 9.7% Headline

This morning, the Bureau of Labor Statistics released its monthly unemployment report.  Surprisingly, the official unemployment rate dropped from 10.0% to 9.7%.

However, several of the Commissioner's statements give pause to immediate jumps of joy:

  1. The unemployment rate declined from 10.0 to 9.7 percent in January. Nonfarm payroll employment was essentially unchanged (-20,000) and on net has shown little movement over the last 3 months.
  2. In January, job losses continued in construction and in transportation and warehousing, while employment increased in temporary help services and retail trade....Employment in temporary help services grew by 52,000 over the month. This industry, which provides workers to other businesses, has added nearly a quarter of a million jobs since its recent low point last September.
  3. With revisions released today, job losses since the start of the recession in December 2007 totaled 8.4 million, substantially more than previously reported.
  4. Federal government employment rose in January, partly due to hiring for the decennial census.
  5. ...both the number of unemployed persons (14.8 million) and the unemployment rate (9.7 percent) declined in January. However, the share of those jobless for 27 weeks and over continued to rise.
  6.  Accounting for revisions during the benchmark and post-benchmark periods, the previously published level of total nonfarm employment for December 2009 was revised downward by 1,363,000. [Emphasis added.]

A most important take-away from the job numbers is this (in Reuters):
A sharp increase in the number of people giving up looking for work helped to depress the jobless rate. The number of 'discouraged job seekers' rose to 1.1 million in January from 734,000 a year ago.

Temporary agencies and the federal government seems to be where the bulk of the hiring was in January although manufacturers also added 11,000 jobs.

Before we break out the bubbly though, we’ll wait to let more able experts parse the jobs numbers. In the meantime, it seems to us that celebration may be a bit premature 
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"I bring reason to your ears, and, in language as plain as ABC, hold up truth to your eyes." Thomas Paine December 23, 1776

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