Today is “Employment Situation” Day, when the BLS releases its monthly report on what the unemployment numbers are. Today showed a very positive report, with jobs growing by 257,000 in the private sector and the unemployment rate falling 0.2% to 8.3%. Good news indeed. Here is a picture of the situation:
Here are the highlights of the report:
- The total number of unemployed is now 12.8 million.
- The number of job losers and persons who completed temporary jobs fell to 7.3 million.
- The number of long-term unemployed (those jobless for 27 weeks or more) was little changed at 5.5
- million and accounted for 42.9 percent of the unemployed.
- The employment-population ratio (58.5 percent) rose in January, while the civilian labor force participation rate held at 63.7 percent.
- The number of persons employed part time for economic reasons, at 8.2 million, changed little in
- January.
- In January, 2.8 million persons were marginally attached to the labor force, essentially unchanged
- from a year earlier.
- Among the marginally attached, there were 1.1 million discouraged workers in January, little different from a year earlier.
Where are the jobs?
- Employment services (+33,000)
- Accounting and bookkeeping (+13,000)
- Architectural and engineering services (+7,000)
- Health care (+31,000)
- Wholesale trade (+14,000)
- Department stores (+19,000)
- Health and personal care stores (+7,000)
- Automobile dealers (+7,000)
- Manufacturing, mostly durable goods (+ 50,000)
- Construction (+21,000)
- Mining (+10,000)
The average workweek for all employees on private nonfarm payrolls was unchanged in January. The manufacturing workweek increased by 0.3 hour to 40.9 hours, and factory overtime increased by 0.1 hour to 3.4 hours.
In January, average hourly earnings for all employees on private nonfarm payrolls rose by 4 cents, or 0.2 percent, to $23.29. Over the past 12 months, average hourly earnings have increased by 1.9 percent.
For those of you looking for the “U-6″ data, go here.
I would say this report is good, but not great, and the trend looks positive, for the moment.
As we discussed in last month’s report,we noted that many of the new jobs were low paying jobs. This month the mix of new jobs is better, but still weighted to lower paying jobs.
There is still a huge controversy over the meaning of these gains, especially in what is called the household survey which measures the total rate of unemployment. Today my fellow Austrian blogger Mish, who has been doing the yeoman’s work of tracking these data, lambasted the report. I urge you to read Mish’s article. With regard to the model used to calculate the percentage of the population that is employable and unemployed Mish notes:
People are dropping out of the labor force at an astounding, almost unbelievable rate, holding the unemployment rate artificially low. … In the last year, the civilian population rose by 3,565,000. Yet the labor force only rose by 1,145,000. Those not in the labor force rose by 2,420,000. That is an amazing “achievement” to say the least. Were it not for people dropping out of the labor force, the unemployment rate would be well over 11%.
I should point out that this analysis, and a similar one done by Zero Hedge, have been criticized by the Calculated Risk blog which I also follow closely. He called this kind of analysis as “terrible” and shows what the actual numbers are. Zero Hedge quotes from TribTabs who say the data is “very, very suspicious.” I’ll let Mish fight back on this one.
Mish also notes that price inflation is outstripping wage gains:
This means that employee wages and earning are going backwards.
I will repeat what I said in last month’s article:
The mainstream media are hailing these numbers as a turnaround point in the economy (e.g., “Hiring Shows Recovery Gaining Traction“). To some extent they are correct, and this is where it gets tricky. Despite all of the negative impacts to the economy as a result of the Crash and post-Crash government policies, there is still an ongoing organic recovery as private businesses struggle to stay in business and expand. The problem is that it has not been enough to really push employment.
I believe much of what we are presently seeing is mostly growth related to monetary and fiscal stimulus which is counterproductive to a real recovery. With such stimulus, the effect will fade when the money runs out and we will be left with the negative effects: price distortions, capital consumption, and more malinvestment. Also, we have the impacts of much of the world heading into recession.
