Saturday, February 5, 2011

USA Unemployment Rate Drops to 9.0% (Charts) *Jobs growth only +36K in January*


Bureau of Labor Statistics: Monthly Employment Situation Summary

USA Unemployment Rate Decreases to 9.0% in January

Official Statement by the U.S. Bureau of Labor Statistics The unemployment rate fell by 0.4 percentage point to 9.0 percent in January, while nonfarm payroll employment changed little (+36,000), the U.S. Bureau of Labor Statistics reported today. Employment rose in manufacturing and in retail trade but was down in construction and in transportation and warehousing. Employment in most other major industries changed little over the month.

* Please note the unemployment rate is calculated by a household survey and the jobs data (increase or decrease) is calculated by an employer survey. The household survey includes self-employed and farm workers, the employer survey does not include these. Overall, the jobs data (employer survey) indicates insufficient jobs growth to decrease the unemployment rate (household survey). *

Unemployment Rate (Chart) The unemployment rate (U-3) decreased to 9.0% in January and is the lowest since April 2009 (8.9%). The Great Recession peak was in October 2009 at 10.1%. The chart below shows the latest 37 months of the monthly unemployment rate (U-3).

Total Nonfarm Employment Monthly Net Change (Chart) Total nonfarm employment increased only +36,000 (preliminary) in January, another smaller than expected increase, and the 4th consecutive monthly increase. The total  nonfarm  employment job losses peaked during the Great Recession at -820,000 in January 2009. The best jobs gain subsequently has been +458,000 in May 2010. The net jobs gain in total nonfarm employment for 2010 was +724,000, compared to net job losses of -5,063,000 and -3,600,000 in 2009 and 2008, respectively. There was a net jobs gain of +902,000 in 2007, before the Great Recession. Although the January gain in jobs is positive data, the 2010 and beginning of 2011 net gain in jobs is overshadowed by the net job losses in 2008 and 2009. The chart below shows the latest 37 months of monthly changes in total nonfarm employment. Total nonfarm employment is private sector plus government sector jobs.

Commentary There was a revision of the monthly 2010 data, so the commentary has changed since the post last month. The January decrease in the Unemployment Rate (U-3) to 9.0% is more than expected and the monthly increase (+36,000) in Total Nonfarm Employment is less than expected. Perhaps this quote on the January employment report sums it up best: "This jobs report is like looking in a fun-house mirror," said Stuart Hoffman, chief economist at PNC Financial Services Group. "It's hard to be sure what's really going on." As Reuters noted previously, "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 early February and throughout January, mostly December data, has been overall positive. A review of selected January economic news is reviewed here [USA & Global Economy: Recovery Continues in January (GDP Charts) *Monthly Economic Review*].

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