Friday, January 7, 2011

USA Unemployment Rate Decreases to 9.4% (Charts) *103K jobs created in December*

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Bureau of Labor Statistics: Monthly Employment Situation Summary


USA Unemployment Rate Decreases to 9.4% in December

Official Statement The U.S. Bureau of Labor Statistics reported, "The unemployment rate fell by 0.4 percentage point to 9.4 percent in December, and nonfarm payroll employment increased by 103,000, the U.S. Bureau of Labor Statistics reported today. Employment rose in leisure and hospitality and in health care but was little changed in other major industries."
 
Unemployment Rate (Chart) The unemployment rate (U-3) decreased to 9.4% in December and is the lowest since July 2009 (9.4%). The rate peaked during the USA Great Recession in October and November 2009 at 10.1% and 10.0%, respectively. The low subsequently had been 9.5% in June and July 2010. The chart below shows the latest 36 months (3 years) of the monthly unemployment rate (U-3).
 

 
Total Nonfarm Employment (Chart) Total nonfarm employment increased +103,000 (preliminary) in December, a smaller than expected increase, and the 3rd consecutive monthly increase. The total  nonfarm  employment job losses peaked during the USA Great Recession at -779,000 in January 2009. The best jobs gain subsequently has been +432,000 in May 2010. The net jobs gain in total nonfarm employment for 2010 has been +1,124,000, compared to net job losses of 4,740,000 and 3,623,000 in 2009 and 2008, respectively. Although the December gain in jobs is positive data, the 2010 net gain in jobs is overshadowed by the net job losses in 2008 and 2009. The chart below shows the latest 36 months (3 years) of monthly changes in total nonfarm employment. Total nonfarm employment is private sector plus government sector jobs.



Private Sector Employment (Chart) Private sector employment increased +113,000 (preliminary) in December, a smaller than expected increase, and the 12th consecutive monthly increase. Private sector employment job losses peaked during the USA Great Recession at -806,000 in January 2009. The best jobs gains subsequently has been +241,000 in April 2010. The net jobs gain in the private sector for 2010 has been +1,346,000, compared to net job losses of 4,660,000 and 3,807,000 in 2009 and 2008, respectively. Although the December gain in jobs is positive data, the 2010 net gain in jobs is overshadowed by the net job losses in 2008 and 2009. During the depths of the Great Recession, there was a dismal 22 consecutive months of job losses from January 2008 through October 2009 and 23 of 24  months through December 2009. The chart below shows the latest 36 months (3 years) of monthly changes in private sector employment.



Government Employment (Chart) Government employment decreased -10,000 (preliminary) in December, and has decreased 6 of the last 7 months. Government employment job losses reached at cyclical peak recently at -236,000 in June 2010. The best jobs gain was the previous month +381,000 in May 2010. The BLS has attributed this jobs gain and loss mostly to the 2010 Census. There has been a net jobs decrease of -222,000 for 2010, compared to a net job loss of -80,000 and net job gain of +184,000 in 2009 and 2008, respectively. The chart below shows the latest 36 months (3 years) of monthly changes in government employment.



Total Unemployed Total unemployed decreased -556,000 to 14,485,000 (preliminary) in December. The total unemployed peaked during the USA Great Recession in October 2009 at 15,612,000. The low subsequently is now the current December 2010 total of 14,485,000. The chart below shows the latest 36 months (3 years) of the total unemployed.



Underemployment Rate The underemployment rate (U-6) decreased to 16.7% (preliminary) in December for a 2nd consecutive monthly decrease. The rate peaked during the USA Great Recession in October, November, and December 2009 at 17.4%, 17.2%, and 17.2%, respectively. The low subsequently has been 16.5% in January, June, and July 2010. The chart below shows the latest 36 months (3 years) of the monthly underemployment rate (U-6).




Commentary

Unemployment Rate, Total Nonfarm Employment The December decrease in the Unemployment Rate (U-3) to 9.4% and the less than expected monthly increase (+103,000) in Total Nonfarm Employment is overall postive news. As, Reuters noted, "The economy usually needs to create between 125,000 and 150,000 jobs a month to keep the unemployment rate from rising, but a faster pace might be needed now since so many discouraged workers are sitting on the sidelines. As job growth picks up, these workers could re-enter the labor force, keeping upward pressure on the jobless rate". Economic news in November, mostly October data, was overall postive and the economic news in December (mostly November data) was even better. So far, January economic news (mostly December data) has exceeded the December announcements. The trend for USA and Global economic data, including the USA employment situation and weekly unemployment claims, has been for the better. A review of selected December economic news is reviewed here [USA & Global Economy: Encouraging News in December (GDP Charts) *Monthly Economic Review*].

USA GDP The December BLS emplyment situation summary report and other economic data indicates the USA GDP growth rate is low, but not as low as earlier projected. The Q4 2010 USA GDP now appears to exceed +3%. The USA GDP is reviewed here for Q3 [USA GDP Q3 2010 Estimated at +2.6% (Charts) *Increase of +0.1% from prior estimate*].

Net Jobs Gain in 2010 After 5 consecutive months of net employment gains (January through May 2010), there were 4 consecutive months of net employment losses (June through September 2010), and now 3 consecutive months of net jobs gain (October through December 2010). This results in a net jobs gain in total nonfarm employment of +1,124,000 in 2010. Private sector employment increased every month in 2010, for 12 consecutive months, for a net jobs gain of +1,346,000 in 2010. Government sector employment has decreased 6 of the past 7 months and 8 of the 12 months in 2010 for a net jobs loss of -222,000 in 2010.

Cost of the Great Recession There has been a net jobs gain in total nonfarm employment of +1,124,000 for 2010 and the unemployment and underemployment rates have decreased recently. Discouraged workers are not included and appear to be a vast pool of potential labor. The USA is still not creating jobs fast enough, period. This also does not even begin to recover the net jobs lost in 2008 and 2009 of -3,623,000 and -4,740,000, respectively. That's 7,239,000 jobs lost. Private sector employment has had a net jobs increase in 2010 of +1,346,000, which is encouraging. However, when compared to the private sector jobs lost in 2008 and 2009, this has resulted in a net jobs lost of -7,121,000 during this Great Recession and Recovery cycle. The government sector employment gained +184,000 jobs in 2008, lost -80,000 jobs in 2009, and lost -222,000 in 2010 for a net jobs lost of -118,000 during this Great Recession and Recovery cycle.

Weekly Unemployment Claims Weekly unemployment insurance claims have been trending downwards and the overall data is very encouraging. The 4-week moving average is at a post-Great Recession cyclical low. Weekly unemployment insurance claims are monitored, charted, and reviewed on the Weekly Unemployment Claims page.


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