Latest Employment Data: Good or Bad?

Each month here on the Blawg, we update all the latest employment indicators in the handy box to the right within nanoseconds of their release. Now that the dust has settled a bit over the weekend, we thought we'd recap some of the latest indicators. Some are up. Some are down. What does it all mean? Employment Situation Up (Barely) Adjectives used by economists to describe the latest data ranged from "lousy" to "mysterious" to "confounding." According to the government's official figures, total nonfarm payroll employment was up 36,000 – far below the 200,000 figure economists say is needed to sustain growth and barely enough to make a dent in the more than 8.74 million jobs that disappeared during the recession. Employment was up in manufacturing and retail but down in construction, transporation and warehousing. All other major industries remained virtually unchanged. Bad winter weather undoubtedly played a role in keeping the numbers down. 886,000 people were unable to go to work during the week of January 9 due to the weather. Some economists believe that job gains would have been well above 100,000 without all the snow and ice. More jobs were lost in the latest recession than in the previous four combined. At January's pace it will take 219 months or until mid-2029 to recapture the number of jobs lost. Unemployment Down The unemployment rate fell again from 9.4% to 9.0%, its lowest in nearly two years. The number of unemployed persons fell 600,000 to 13.9 million. Overall, the unemployment rate had its largest two-months decline since the 1950s. The biggest drops in unemployment in January were among adult men, Caucasians and Hispanics. All other groups were virtually unchanged. Economist weren't sure what caused the unexpected drop. Some said it was the result of people dropping out of the labor force. Others said it was due to an annual population Census adjustment. Others pointed to the fact that the employment situation numbers are based on employer surveys while the unemployment rate is derived from a different survey of U.S. households. Still others said it was the result of people actually finding jobs. Even with the modest recent improvements, unemployment remains far beyond the 6% rate considered "full employment" by most economists. Labor Force Participation Down Slightly Many economists feel that the unemployment rate is somewhat misleading due to what the data omits. Instead, some rely more heavily on overall labor force participation and the employment-population ratio. Labor force participation dropped again to 64.2% – the lowest level since 1984. However, employment-population ratio rose a point to 58.4%. Another number examined by economists is "discouraged workers" (those not currently seeking employment because they believe no work is available). That number was 1.0 million, about the same as a year ago. Average Workweek and Pay The average workweek fell by 0.1 hour to 34.2 hours. The manufacturing workweek rose by 0.1 hours to 40.5 hours, with factory overtime remaining at 3.1 hours. Among the biggest workweek drops was in construction, which fell 1.o hour, mostly as a result of the bad weather. Average hourly earnings increased by 8 cents to $22.86. Over the last 12 months, average earnings have increased 1.9%. Other Financial News Mixed Rising retail sales, increased manufacturing activity and growing stock prices over the past several months all seem to indicate that the economy may be improving. That improvement hasn't resulted in widespread hiring, however, as evidenced by the most recent Manpower Employment Outlook Survey. Stay tuned for more. (Sources: Bureau of Labor Statistics, The Wall Street Journal, CNNMoney, Manpower Inc.)

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