NBF Financial spins the positives, The Economist the negatives
Payroll jobs were reported down 20,000 in January. Despite this worst-than-expected outcome, a number of elements in the report were very encouraging.
Cyclical industries such as manufacturing (+11K, first rise in three years) and help-supply agencies (+52,000, the 4th consecutive increase) both added jobs during the month. Importantly, the economy-wide wage bill increased 0.5% on the month, the second rise in three months.
As today’s Hot Chart shows, the wage bill is now expanding at a 4% clip in the last three months, the best showing since early 2008. We also note that the household survey from which the unemployment rate is derived showed the addition of 784,000 jobs in January (after adjusting for revisions to population).
The employment figures derived from this survey, however, are much more volatile than those obtained from the payroll survey. As such, it is preferable to use a 3-month moving average to extract the underlying trend. As shown, household jobs still show a gain of 110,000 after smoothing. In the past, the household survey has lead the payroll survey coming out of recessions.
The Economist lists the negatives:
(..) the problem of the long-term unemployed continues to grow. Just over 41% of all unemployed workers, over 6.3m workers, have been out of work for 27 weeks or more.
Most troubling of all is the continued failure of economic growth to benefit the labour market. Employment fell by over 300,000 jobs during the last three months of 2009, despite strong expansion in GDP. The first quarter of 2010 is unlikely to show as big an output gain, suggesting that the pace of improvement in employment may be slowing, even as regular job growth has yet to return. And the situation may be more dire still; initial jobless claims have grown in recent weeks, indicating that what momentum there was in labour markets has been lost.
The January data will increase the pressure on the Senate to pass a jobs bill. The House of Representatives assented in December to a measure designed to boost hiring, worth $154 billion, and the president outlined a number of policies to encourage employers to hire in his state-of-the-union address and budget proposal. At the centre of the package is a $33 billion tax credit, available to firms that add employees or increase hours or wages. The policy may be just the kick firms need to take on new help. In the fourth quarter, labour productivity rose by 6.2% as businesses expanded output while maintaining lean payrolls. (…)
Related posts:
