The American economy once again failed to keep up with population growth in job creation in January, the second poor jobs report in a row. Only 113,000 jobs were added last month according to the BLS, but the labor force rebounded a bit as well:
Total nonfarm payroll employment rose by 113,000 in January, and the unemployment rate was little changed at 6.6 percent, the U.S. Bureau of Labor Statistics reported today. Employment grew in construction, manufacturing, wholesale trade, and mining.
Both the number of unemployed persons, at 10.2 million, and the unemployment rate, at 6.6 percent, changed little in January. Since October, the jobless rate has decreased by 0.6 percentage point. (See table A-1.) (See the note and tables B and C for information about the effect of annual population adjustments to the household survey estimates.) ….
After accounting for the annual adjustment to the population controls, the civilian labor force rose by 499,000 in January, and the labor force participation rate edged up to 63.0 percent. Total employment, as measured by the household survey, increased by 616,000 over the month, and the employment-population ratio increased by 0.2 percentage point to 58.8 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 (sometimes referred to as involuntary part-time workers) fell by 514,000 to 7.3 million in January. These individuals were working part time because their hours had been cut back or because they were unable to find full-time work. (See table A-8.)
The BLS applied its annual revisions to benchmarks, which in the end didn’t change too much of its analyses over the past year. The impact to the December-January calculations was almost nil, for instance.
There are a couple of bright spots. The U-6 measure of overall unemployment dropped to 12.7% even with the increase in the labor force, its lowest reading since December 2008 near the apex of the job-loss meltdown in the Great Recession. The number of people employed in the Establishment survey hit its highest level since June 2008, and in the private-sector since March 2008. The workforce participation rate bounced back a little, but not much; 63.0% is still tied for the fifth-lowest month since the 1970s.
Still, we need to add 150,000 jobs a month to keep pace with population growth. We’re closer to it than in December, which was upgraded to 75,000 jobs added, but still far off the pace for even stagnation.
Reuters reports this as a big miss from expectations, and says don’t blame the cold weather this time:
U.S. employers hired far fewer workers than expected in January and job gains for the prior month were barely revised up, suggesting a loss of momentum in the economy, even as the unemployment rate hit a new five-year low of 6.6 percent.
Nonfarm payrolls rose only 113,000, the Labor Department said on Friday. But with strong job gains in construction, cold weather probably was not a major factor in January.
The second straight month of weak hiring – marked by declines in retail, utilities, government, and education and health employment – could be a problem for the Federal Reserve, which is tapering its monthly bond-purchasing stimulus program.
The AP called it “a surprisingly weak” jobs report:
Hiring was surprisingly weak in January for the second straight month, likely renewing concern that the U.S. economy might be slowing after a strong finish last year.
The Labor Department says employers added 113,000 jobs, less than the average monthly gain of 194,000 in 2013. This follows December’s tepid increase of just 75,000. Job gains have averaged only 154,000 the past three months, down from 201,000 in the preceding three months. …
The anxiety marks a reversal from a few weeks ago, when most analysts were increasingly hopeful about the global economy. U.S. growth came in at a sturdy 3.7 percent annual pace in the second half of last year. The Dow Jones industrial average finished 2013 at a record high. Europe’s economy was slowly emerging from a long recession. Japan was finally perking up after two decades of stagnation.
But then came December’s weak jobs total. And on Monday, an industry survey found that manufacturing grew much more slowly in January than in December. A measure of new orders in the report sank to the lowest level in a year. That report contributed to a dizzying 326-point plunge in the Dow Jones industrial average.
Also this week, automakers said sales slipped 3 percent in January. And last week, a measure of signed contracts to buy homes fell sharply, according to the National Association of Realtors.
Basically, we’re going through cyclic stagnation. We get small boosts in job expansion, which economists keep treating as solid portents for explosive growth, only to see corrections to the downside shortly afterward. The average effect is still stagnation, and as long as we’re disincentivizing investment and labor, that’s what we will keep seeing.
Update: Steve Eggleston does the deep dive in the comments:
Let’s take a look at that “rebound”, using unseasoned numbers from last January and this January:
- Civilian noninstitutional population – +2,252,000
- Labor force – -413,000 (yes, that’s right, 413,000 fewer people were participating in January 2014 than in January 2013)
- Employed – +1,912,000 (that’s right, the population increased more than the number of employed)
- Officially unemployed – -2,326,000
What of those who were working? Production and non-supervisory employees had their workweek shrink by 0.1 hour from last year to 33.5 hours (the same as December). Their weekly pay increased by $12.75 over the course of the year to $683.07, a not-quite-inflation-matching 1.9% increase.
The supervisors took up the slack because the average workweek of all non-farm employees remained unchanged from both January 2013 and December 2013 at 34.4 hours. Overall weekly pay increased by $15.82 to $832.82, also a 1.9% increase (through the magic of rounding; it is higher than the production/non-supervisory increase).
Update: Steve had two typos in his bullets that called out the wrong years, which I have fixed.