Strike up the band. Break out the confetti. The market’s going to love this. The U.S. unemployment rate dropped to 8.3 percent and non-farm jobs grew by 243,000 in January.
This morning’s monthly report from the U.S. Department of Labor blasted through even the most optimistic of expectations. The jobs gain would have been the largest since May 2010, except that the Labor Department’s data group adjusted 2011’s jobs numbers. Now, only March (+246,000) and April (+251,000) had stronger numbers.
January is the second consecutive month to beat estimates. Economists predicted anywhere from MarketWatch’s tepid 121,000 to the more optimistic 182,000 in the Bloomberg survey. None of the widely reported surveys saw a decline in the unemployment rate.
Indeed, the unemployment rate, which has been declining very slowly since hitting a peak of 10.1 percent in late 2009, is now at the lowest point since February 2009. The government report also put the number of unemployed at 12.8 million. A year ago it was at 13.9 million.
While governments continued to cut jobs — federal jobs were cut by 6,000 and local government cut 11,000 positions — the private sector added 257,000. This was more than 50 percent higher than the ADP estimate earlier in the week.
Most sectors added jobs. Manufacturing accounted for 50,000 new jobs. The services sector as a whole added 176,000 workers, with much of the gain coming in what the government calls “professional and business services.” This includes temp workers and employment services (+33,200) and accounting and bookkeeping services (+12,500), likely due to ramping up for tax season.
Healthcare, a consistent growth area, was up by 30,900 positions. Leisure and hospitality, another growth area for several months, was up by 44,000. Even the battered construction industry managed to add 21,000 jobs during the month.
Only finance (off by 5,000 jobs) and the Information sector (-13,000) lost workers. The latter sector includes far more worker categories than computer professionals and data processing, although these areas also lost workers. The bulk of the loss — 7,900 — came in the motion picture and recording industry.
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On top of the strong January numbers, the revisions by the U.S. Bureau of Labor Statistics resulted in improving the overall hiring numbers for 2011 and further. For November and December alone, the BLS revisions showed 60,000 more jobs than initially reported.
Finally, the government said average hourly wages for all non-farm workers rose 4 cents during the month to $23.29. While the average workweek for all workers was unchanged in January, the manufacturing workweek increased by .3 hours to 40.9 and overtime increased to 3.4 hours.
The overall report was so strongly welcomed it sent stock futures soaring before the market opening. The Dow Jones Industrial average futures jumped 95 points.
One cautionary note: The Monster Employment Index, which tracks jobs posted on career sites and job boards, including Monster, has been declining since October. For January, the Index stood at 133, down from October’s 151. The Conference Board, which also tracks online job postings, showed an increase in January, as it did in December. But the total online listings are still not as high as they were in April last year.
That’s good news.
Wonder what this is about?:
Information sector (-13,000) lost workers.
Happy Friday,
Keith
Unfortunately, from CNBC:
“On the downside, the closely watched labor-force participation number, which can skew the unemployment rate, fell to 63.7 percent, the lowest since May 1983. The number of those working part-time for economic reasons rose 1.2 percent.”
When you lower the number of people in the labor force (why *did* 1.2 million people drop out of it, just in the last month??), you directly affect percentages of un/employment. The news is–unfortunately–not as good as it seems, for those seeking work.
More bummers: the civilian labor force is now at a 30 year record low of 63.7%.
Not too sure what all this finally means (except *maybe* more of those controversial, sought-after, not-sought-after, “holy grail” passive candidates–hehe!), but it’s not all lollipops and unicorns–that seems clear.
@ Joel: quite right. It seems that the best statistical thing would be for increasing of numbers of people to drop completely out of the civilian labor force. That way, they wouldn’t be counted as either unemployed or under-employed…
🙁
kh
It’s great news at this stage, but generally equity markets do not love low unemployment because it increases per-unit labor costs, which compresses margins.
If the Fed managed via QE etc. to reinflate, that’s gonna be fun for the first few years. The economy looks pretty hot from our office- pipeline is stuffed right now more than any 1stQ since 2008, which was a very good year.
People scoff, but I say election day could bring $1.99 gas, 7% unemployment, and 5% inflation….
@ Martin: I was wondering why the stock markets rose earlier, since they often seem to fall on improved UR figures….
The Romans had “bread and circuses”- we have “$1.99 gas, 7% unemployment, and 5% inflation” to keep us happy….
Happy Friday,
KH
@Joel – I think that CNBC made a mistake on that one. There were not suddenly a million+ more people in the population on January, but an adjustment to reflect the latest census data that took effect in January. In short, not a real change in January at all.
Barry Ritholtz of the Big Picture Blog breaks it down like this:
Here you go:
http://data.bls.gov/timeseries/LNS11300000
Year
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2002
66.5 66.8 66.6 66.7 66.7 66.6 66.5 66.6 66.7 66.6 66.4 66.3
2003
66.4 66.4 66.3 66.4 66.4 66.5 66.2 66.1 66.1 66.1 66.1 65.9
2004
66.1 66.0 66.0 65.9 66.0 66.1 66.1 66.0 65.8 65.9 66.0 65.9
2005
65.8 65.9 65.9 66.1 66.1 66.1 66.1 66.2 66.1 66.1 66.0 66.0
2006
66.0 66.1 66.2 66.1 66.1 66.2 66.1 66.2 66.1 66.2 66.3 66.4
2007
66.4 66.3 66.2 65.9 66.0 66.0 66.0 65.8 66.0 65.8 66.0 66.0
2008
66.2 66.0 66.1 65.9 66.1 66.1 66.1 66.1 65.9 66.0 65.8 65.8
2009
65.7 65.8 65.6 65.6 65.7 65.7 65.5 65.4 65.1 65.0 65.0 64.6
2010
64.8 64.9 64.9 65.1 64.9 64.6 64.6 64.7 64.6 64.4 64.5 64.3
2011
64.2 64.2 64.2 64.2 64.2 64.1 64.0 64.1 64.1 64.1 64.0 64.0
2012
63.7
Looks like the highest rate of LF participation in the past decade was 66.8% in 2/2002.
-kh
Keith,
I’m not debating that the labor force participation rate has fallen dramatically since the recession began. My point is specifically that the January drop is a statistical fluke, not a real change for the worse.
From the BLS’ own notes on their release:
@ David: That makes sense. I’m learning about “regression to the mean” and that you shouldn’t make estimates/policies based on outliers like that.
Cheers,
Keith