Unemployment rate drops to 8.3%, 243K jobs added

The US economy had a good month for job creation in December, according to the new report this morning from the Bureau of Labor Statistics.  We added 243,000 net jobs and the unemployment rate fell two-tenths of a percent to 8.3%:

Total nonfarm payroll employment rose by 243,000 in January, and the unemployment rate decreased to 8.3 percent, the U.S. Bureau of Labor Statistics reported today. Job growth was widespread in the private sector, with large employment gains in professional and business services, leisure and hospitality, and manufacturing. Government employment changed little over the month.

There seemed to be a glimmer of hope on workforce participation, too, although not much motion:

After accounting for the annual adjustments to the population controls, the employment-population ratio (58.5 percent) rose in January, while the civilian labor force participation rate held at 63.7 percent. (See table A-1. For additional information about the effects of the population adjustments, see table C.)

The number of persons employed part time for economic reasons, at 8.2 million, changed little in January. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job. (See table A-8.)

In January, 2.8 million persons were marginally attached to the labor force, essentially unchanged from a year earlier. (The data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey. (See table A-16.)

The key measure of labor underutilization, the U-6 number, declined slightly on a seasonally-adjusted basis to 15.1% from 15.2% in December.  That is the lowest U-6 number since February 2009, although it’s still far above the 8-9% range of the second Bush term.  That measure dropped most significantly in the fourth quarter of last year, falling 1.2 points.

There were some changes made to the surveys this month, which is a routine part of adjusting for population shifts.  In this case, it tended to be a wash for the overall jobless rate but lowered participation rates by three-tenths of a point.  That’s why the report says that the civilian-population participation rate was unchanged at 63.7% when it had been 64.0% in December.  The BLS will not restate past results as part of their update.  The U-6 numbers are not based on that survey and so are more consistent within their series.

The AP reports that the expansion was broadly based as well:

Employers have added an average of 201,000 jobs per month in the past three months. That’s 50,000 more jobs per month than the economy averaged in each month last year.

The Labor Department’s January jobs report was filled with other encouraging data and revisions. Hiring was widespread across many high-paying industries. Pay increased. And the economy added 200,000 more jobs in 2011 than first thought.

And the unemployment is nearly a percentage point lower than over the summer, when feared a recession was imminent. The last time the unemployment rate has dropped for five straight months was in late 1994.

It falls to a Reuters analyst, David Sloan, to inject a cautionary note:

January’s non-farm payroll with a 243k increase was sharply above a consensus increase of 150k with positive if undramatic back month revisions. The breakdown looks positive almost across the board with manufacturing at +50k particularly impressive. Workweek data was improved, sustaining an upwardly revised December level, though hourly earnings with a 0.2% rise merely met consensus. The unemployment rate saw another significant fall, by 0.2% to 8.3%, when the consensus was for no change, with the fall due to increased employment not losses in the labor force. The broader U-6 measure of labor market slack, after three straight 0.4% plunges, saw only a modest fall of 0.1% to 15.1%, but there can be no doubts over the positive nature of this report. There is only one obvious significant caveat, an unusually mild winter restricting the number of seasonal layoffs, which are always heavy in January. Unadjusted, January payrolls still fell by 2.689 mln.

We’ll see if this continues, or whether it plateaus as the CBO expects.  If it continues, Barack Obama might start seeing his approval numbers sliding upward again.

Update: Zero Hedge points to a curious change in the number of people not in the labor force:

A month ago, we joked when we said that for Obama to get the unemployment rate to negative by election time, all he has to do is to crush the labor force participation rate to about 55%. Looks like the good folks at the BLS heard us: it appears that the people not in the labor force exploded by an unprecedented record 1.2 million. No, that’s not a typo: 1.2 million people dropped out of the labor force in one month!

I’m looking at the A-16 historical record (for people not in the labor force, not seasonally adjusted), and the number of people 16 years or older not in the work force changed from 87,212,000 in December 2011 to 88,784,000 in January — which is an increase of 1.572 million, not 1.2 million.  That doesn’t affect jobs added, which are calculated in a separate survey, but it would tend to impact the U-6 rate by increasing the denominator of the calculation, which would lower the resulting ratio or percentage.  Let’s take a look at the raw numbers in those categories:

• Want a job now (in thousands, total set) — 6495, up from 6135 in December
• Plus, Available to work now — 2809, up from 2540
• Plus, Discouragement over job prospects — 1059, up from 945
• Plus, reasons other than discouragement — 1749, up from 1595

The drop in the U-6 looks like it’s indicating a decline when we’re in fact seeing a modest increase in discouragement, even with the added jobs.

Update II: Steve Eggleston writes to tell me that Zero Hedge was looking at seasonally adjusted figures from table A-1 while I was checking A-16.  The change in A-1 is 1.177 million, rounded up to 1.2 million.  Also for clarification, the “plus” items in the bulleted list above are subsets of the “Want a job now” category.

One source from Capitol Hill wants to make this point as well:

Here is an important fact:  Despite a population increase…

• People working in Jan. 2009 – 142,099,000
• People working in Jan. 2012 – 141,637,000

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• Fiscal conservatism on the decline?
• Bobby Jindal: Paternalistic, big-government liberalism is the biggest loser here

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