Jan Employment

Today’s BLS payroll release for Jan was down right discombobulating. The headline figure was nothing near expectations yet the unemployment rate looked great. What gives here?

First to jobs. The private sector gain was only 50M. We have maintained for a long time that these jobs would flatten estimates. And that in fact has been the evidence past weeks, esp just recently in manuf. Today’s result is conveniently blamed on weather. Maybe. The past many years we have followed this release, weather has not been much of a factor. We’ll see.

Next to “unemployment,” down to 9% from 9.4% when forecasters predicted 9.5%! Why the result? Because of 1) a sharp decline in the labor force (-504M) and 2) combined a gain of 118M in household employment, leading to a plunge in the number of unemployed (-622).

There are really two surveys here folks - one of business establishments, and the other, taken from households. The household survey generates the unemployment rate, the business survey - workers gain or loss by sector, and earning and hours. Hourly earnings rose 0.4%, now almost 2% above their year ago level. The av workweek fell by 6 minutes to 34.2 hours from 34.3 - this clearly a result of the weather.

Robert Craven