The unemployment rate fell, jobs were lost, and large adjustments were made in January’s Employment Situation Report. The report itself also had substantial changes. New statistics were added, and the HTML format was improved. Let’s start with the most important data point: 20,000 jobs were lost on a seasonally adjusted basis in January. As I’ve pointed out before, there is a large seasonal component to this number, so it’s the important number for trend followers. For those that are curious how many actual jobs were lost, the unadjusted numbers show a loss of 2.8 million jobs for the month of January. Back to the adjusted numbers, the Bloomberg consensus range was -40,000 to 75,000. The unemployment rate was better than expectations, though. From the report:
Total nonfarm payroll employment was essentially unchanged in January (-20,000). Job losses continued in construction and in transportation and warehousing, while employment increased in temporary help services and retail trade. Since the start of the recession in December 2007, payroll employment has fallen by 8.4 million. Over the last 3 months, however, employment has shown little net change.
Construction employment declined by 75,000 in January, with nonresidential specialty trade contractors (-48,000) accounting for the majority of the decline. Since December 2007, employment in construction has fallen by 1.9 million.
In January, transportation and warehousing employment fell by 19,000, due to a large job loss among couriers and messengers (-23,000).
Employment in manufacturing was little changed in January (11,000). After experiencing steep job losses earlier in the recession, employment declines moderated considerably in the second half of 2009. In January, job gains in motor vehicles and parts (23,000) and plastics and rubber products (6,000) offset small job losses elsewhere in the industry.
In January, temporary help services added 52,000 jobs. Since reaching a low point in September 2009, temporary help services employment has risen by 247,000.
Retail trade employment rose by 42,000 in January, after showing little change in the prior 2 months. Job gains occurred in January among food stores (14,000), clothing stores (13,000), and general merchandise retailers (10,000).
Health care employment continued to trend up in January. Ambulatory health care services added 15,000 jobs over the month.
In January, the federal government added 33,000 jobs, including 9,000 temporary positions for Census 2010. Employment in state and local governments, excluding education, continued to trend down.
There’s a lot to look at there. It’s important to remember that these are adjusted numbers. In reality, 500k retail jobs were lost, compared to the 42k jobs added by the adjustment. This means that normally we’d expect more jobs to be lost after Christmas. However, when you are talking about half a million people without a paycheck, it’s hard to get too happy about a statistical adjustment for a single month. Also, while the trend data show improvement, we have received multiple reports that showed that many good trends that started in January also ended in January. Not much of a “trend.”
Temporary help is a leading indicator of a recovery. Once again, the adjusted and unadjusted numbers point in opposite directions, so I am curious to see how this plays out. I’m also not putting a lot of my own faith in the temporary worker indicator because of how this recession has evolved. I think it will still be a leading indicator, I just think the lag from temporary to permanent jobs will be greater than the historic norm.
Warehousing is down. Storage jobs were lost, which is a bit odd given the unprecedented buildup in inventories we had last quarter. Storage jobs were lost in December too. Storage jobs were lost on an annual basis as well. Growth?
Census hiring is 9,000 above the adjustment. I bumped into a census employee yesterday. She was talking to the staff at a marina about how to account for live-aboards. She stressed that she was not the person coming to gather the data, she was just there to prepare them for the arrival of said data collector. Expect (apply for) more census jobs in the near future.
Let’s talk about that revision. Remember that 824,000 jobs were going to disappear? There are two things to mention here. First, that adjustment accounts for data in March 2009. Second, the number ended up being 902,000. The underlying (Birth/Death) models were not changed, and continued to add jobs since March. It’s possible that there’s a bit of unwarranted optimism in the official statistics. 1.4 million jobs were revised away through December. We’ve lost roughly 8.4 million jobs since the recession began in late 2007. These adjustments are significant.
The alternative measures of labor underutilization has moved to table A-15. U-6, the broadest measure of unemployment, crept dropped from 17.3% to 16.5% (unadjusted, it increased from 17.1% to 18%). This is conditionally good data. When jobs are lost and the unemployment rate decreases, something strange is happening. The unemployment rate is determined by the household survey (phone survey). If participants respond that there are no jobs out there, they are not counted as part of the labor force. However, that explained differences in the data better in previous months than in January. There wasn’t a significant change in labor force participation in January. The household survey and the establishment survey tend to correlate over time, but they do deviate from time to time. Since January has such a large seasonal component, I’m willing to blame everything on the seasonal adjustment.
This wasn’t as good a report as I had hoped. While I initially expected job losses, there was enough good news above the usual seasonal stuff to give me hope for a positive number after the adjustment. The falling unemployment rate doesn’t match up well to other employment figures. If the trend data from January continues, things will look better in February. That doesn’t look too probable right now. In addition to a few reports showing tapering growth in January, the headlines for big job cuts have picked back up. Here’s a secret: publicly traded companies don’t like to hire when their stocks are falling. If this correction doesn’t reverse itself soon, I’m going to have an even more pessimistic outlook for jobs. This outlook doesn’t match up perfectly with reality. Most hiring in a recovery starts with small businesses (presumably ones that are not publicly traded). The quality of the assessment is dependent upon the mood contagion from publicly traded companies to small businesses. Sometimes I worry about making statements like the previous without mentioning the links in the chain that might break to prove me wrong.
I should finish by mentioning that there are numerous changes to this monthly report. There are now data tables to break out the statistics for veterans, foreign born, etc. I haven’t looked at this data enough to make any useful conclusions. The racial data (which is not new) always shows that minorities are screwed. The jobless rate for women is lower than the jobless rate for men (but the participation rates are not equal). Click on the first link to browse through the data.
