Diary

Another Good Employment Report. Unemployment Rate down to 8.3%.

Today, the BLS released the Employment Situation Summary for January 2012.  The report showed a gain of 243,000 jobs (257,000 private sector gains) and showed the unemployment rate falling to 8.3% on both increases in the number of employed and a decrease in the number of unemployed.  The U-6 unemployment fell again to 15.1% and the number of discouraged workers is unchanged from a year ago, while those labeling themselves as not in the labor force, but want a job fell slightly from last month.  The November report was revised up from 100,000 to 157,000 and the December report was revised up from 200,000 to 203,000.  Also, the benchmark revision was released this month and it showed that the BLS underestimated job gains by 162,000 for 2011 (not big, but the first positive revision in 4 years I believe).  This report showed strong gains in manufacturing (up 50,000), business services (up 70,000), mining (up 10,000), healthcare (up 31,000), construction (up 20,000), and travel/leisure (up 44,000).  The participation rate was unchanged at 63.7% and the employment-population ratio increased slightly.  The seasonal adjustment for the month was right in line with its 5 year average.  Finally, the birth/death adjustment SUBTRACTED 367,000 jobs from the employment number this month.

Overall, this was a pretty good report with strength in many areas (especially important are construction and manufacturing, as these were the leaders in the Reagan recovery of 1983).  The unemployment rate continues to fall along with all of the other measures of unemployment (U-4,5, and 6).  The benchmark revision being positive for last year means that the birth/death adjustments were essentially spot on and the total we actually created roughly 13,000 more jobs a month than the original estimates.  Hopefully, the employment situation has finally turned a corner and with the decline in the productivity growth rate we saw last quarter, it is likely that any increases in demand are going to have to be met with more job creation rather that increased automation/technology at least for a while.

 

For anyone interested in what has been behind the 13 year drop in the labor force participation rate, here is a good resource from the St. Louis Fed.