Unemployment Rate Pleases, Jobs Growth Disappoints

Picking up steam or still chugging uphill? There are enough contradictory signals in the December jobs report out this morning to keep everyone wondering just what gear the American economy is in.

The U.S. Labor Department reported that the national unemployment rate fell to 9.4 percent, significantly better than economists expected, but only 103,000 jobs were added, significantly less than predicted. The private sector added 113,000 jobs, far below the optimistic 180,000 that some surveys projected.

At the same time, the U.S. Bureau of Labor Statistics, which compiles the numbers, revised its October and November numbers upward by 70,000. November’s original 39,000 new job count was increased to 71,000 and October went from 172,000 to 210,000.

The biggest improvements in December came in leisure and hospitality (47,000 job increase) and in healthcare  (+37,000 jobs). Construction continued to shed jobs, losing 16,000 during the month, the largest loss among the industry sectors. Local government also continued to downsize, cutting 10,000 jobs.

Economists surveyed in the days ahead of the report from the Bureau of Labor Statistics had been expecting anywhere from about 140,000 to 175,000 new jobs in December and the unemployment rate to hold steady at 9.8 percent or decline slightly to 9.7 percent.

The estimates were bolstered by a mid-week report from payroll processor ADP, which said companies added 297,000 jobs during the month. The estimate was widely doubted as too optimistic, but it did fuel hope that today’s official report would show strong job growth.

After the report’s release, economists and analysts voiced their uncertainty about job growth. Most seemed to agree that the economy is headed in the right direction, if slowly, but companies will have to accelerate hiring substantially to cut the unemployment rate further and sustain the recovery.

The New York Times this morning quoted Steven Blitz, a senior economist for ITG Investment Research, saying, “The U.S. economy finally appears to be picking up steam and headed toward recovery.”

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Jeffrey N. Kleintop, chief market strategist at LPL Financial, told The Times the report was “not terrible” and said, “But there is no real job creation here.”

Marketwatch talked with Julia Coronado, chief economist for North America at BNP Paribas in New York, who said, “The economy is adding workers but there are no reliable signs the pace of hiring is improving.”

“We are staying on track,” she added, “but I’m not sure growth is set to accelerate.”

The BLS report shows that though the number of unemployed persons dropped by 556,000 to 14.5 million, the number of long-term unemployed and others were essentially unchanged. According to the report, 6.4 million people have been out of work more than 26 weeks. Another 8.9 million are working part-time because they have no other choice.

At least some part of the reason for the decline in the unemployment rate was that more people gave up looking for work in December. The government counts as unemployed only those persons who actively search for work during the survey period.

John Zappe is the editor of TLNT.com and a contributing editor of ERE.net. John was a newspaper reporter and editor until his geek gene lead him to launch his first website in 1994. He developed and managed online newspaper employment sites and sold advertising services to recruiters and employers. Before joining ERE Media in 2006, John was a senior consultant and analyst with Advanced Interactive Media and previously was Vice President of Digital Media for the Los Angeles Newspaper Group.

Besides writing for ERE, John consults with staffing firms and employment agencies, providing content and managing their social media programs. He also works with organizations and businesses to assist with audience development and marketing. In his spare time  he can be found hiking in the California mountains or competing in canine agility and obedience competitions.

You can contact him here.

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4 Comments on “Unemployment Rate Pleases, Jobs Growth Disappoints

  1. John, wait until BLS restates its numbers for the past year – then hold on to the bucking bronco.

    Missing from your write up was a breakdown of the ADP numbers: of the 297K, only 27K were goods producing jobs. Although the number of goods producing jobs was up from 14K in ADP’s previous report, this is abysmal.

    To speak of these reports in terms of recovery is perfuming a pig; same goes with quoting (not you John but others) surveys of recruiters who “think” they might be recruiting more in the coming weeks. We have significant global infrastructure problems that unless fixed – social welfare systems, tax overloads, dubiously funded healthcare mandates – will impede any chance of a prosperous recovery for some time.

    John, if ever there was a time for a recruiter to become a politician, to stand beside the others who are anything but recruiters and speak intelligently about how jobs ARE created and filled, now is the time.

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