February 5, 2010

The January Employment Situation Report (020510)

Filed under: Economy,Taxes & Government — Tom @ 8:18 am

Will January 2010 be the month when private-sector employment finally picked up after years of contraction? (Update: Private-sector employment contracted for the 25th month in the past 26, but November was restated to show a seasonally adjusted 75K pickup in the private sector from a previously reported zero. December’s private-sector statistic now reads -123K.)

Will the comprehensive revision really be as bad or worse than the 824,000 jobs lost that the Bureau of Labor Statistics telegraphed last year? (Update: Worse.)

In the runup, ADP said on Wednesday that 22,000 seasonally adjusted private-sector jobs were lost in January. AP reports from yesterday carried predictions that today’s number for the entire economy will be +5,000. A really good New York Post column by John Crudele cites +13,000.

Those of us who follow the actuals are watching what comes in compared to prior years:


January (really mid-late December through mid-late January, when the employment surveys are done) is a big negative month on the ground largely because people hired as seasonal help during the holidays are let go.

The report will come out here at 8:30 a.m.

The news:

The unemployment rate fell from 10.0 to 9.7 percent in January, and nonfarm payroll employment was essentially unchanged (-20,000), the U.S. Bureau of Labor Statistics reported today. Employment fell in construction and in transportation and warehousing, while temporary help services and retail trade added jobs.

What was supposed to be relieving news (jobs) turned out not so good (pending revisions, of course), and what was supposed to be bad news (the unemployment rate) ended up being “good.”

But the obvious reax is that this combination can only be occurring because more Americans on net have stopped looking for work.


Update: The less obvious but more correct reax is that based on contacts with households the Bureau found fewer unemployed people on a seasonally adjusted basis last month. But, it didn’t find them working at establishments they contacted. In other words, things are out of sync, which is unfortunately not unusual. The establishment survey is supposedly more precise (emphasis on “supposedly”).

That is, the guy in this AP report, despite the establishment survey’s contrarian take, is hopefully correct:

“It simply was, people found jobs,” he said. The report is “consistent with continued improvement in the labor market.”


Later in the report, we see that seasonally adjusted government employment grew yet again:

January, the federal government added 33,000 jobs, including 9,000 temporary positions for Census 2010. Employment in state and local governments, excluding education, continued to trend down.

The private-sector shrink (just looked it up in the longer version of the report) was 12,000. The “Honey They Shrunk the Private Sector” trend continues.

As to that comprehensive revision … … ouch:

The total nonfarm employment level for March 2009 was revised downward by 902,000 (930,000 on a seasonally adjusted basis), or 0.7 percent. The previously published level for December 2009 was revised downward 1,390,000 (1,363,000 on a seasonally adjusted basis).

Good news, bad news, wrong net direction: November got revised to +64,000, up from +4,000. December went to -150,000 from -85,000, which was a surprise, because ADP’s January revision to December showed fewer private-sector job losses.

As you’ll see at this NewsBusters post, my CNNMoney.com e-mail alert liked the unemployment rate drop so much that it “forgot” to mention both January’s job losses and the comprehensive revision.



  1. So, the federal government grew while state and local governments shrunk? Not only is the federal sucking energy and people from the private sector, but possibly from state and local governments as well?

    If so, this aggregation of power toward the federal government from our states and cities is very dangerous.

    Comment by zf — February 5, 2010 @ 9:18 am

  2. #1, of course it is, and it’s not by accident.

    Then again, -23,000 out of 14.5 million is hardly evidence of austerity.

    State and local is down only 141,000 from its summer 2008 peak. It needs to come down faster and further, but the federal govt. REALLY needs to shrink, and of course it’s not.

    Comment by TBlumer — February 5, 2010 @ 10:25 am

  3. #1, so that saved or created line should be revised to lost or shifted?

    But the big news is the raw numbers, not seasonally adjusted:

    Unemployment (unemployed for less than a year)
    Dec 09 – 14,740,000
    Jan 10 – 16,147,000

    1,407,000 lost their jobs in ONE MONTH! How’s that created or saved line looking now having committed $787 billion to stimulate the economy?

    Not in Labor Force (wanting a job, i.e. unemployed for over a year)
    Dec 09 – 5,939,000
    Jan 10 – 6,108,000

    169,000 people officially began their one year anniversary of unemployment from January 2009. (btw- I would have been one of those people had I not moved out of state to get a job, yeah it’s that bad in Florida)

    Real Unemployment

    22,255,000 people are now unemployed.

    In January 2009 there were 18,785,000 unemployed, so Obama’s Hope and Change has helped 3,380,000 to lose their jobs since he took office. Nice guy…

    Comment by dscott — February 5, 2010 @ 10:40 am

  4. [...] More discussion of today’s employment report is at BizzyBlog.com. [...]

    Pingback by Predictable: CNNMoney.com E-mail Alert Notes Unemployment Rate Drop, Ignores Jan. 20K Job Loss and -900K Revision — February 5, 2010 @ 12:00 pm

  5. Your point about Dec-Jan needs some context:

    – Dec 09-Jan 10, 1,407K

    – Dec 08-Jan 09, 2,010K
    – Dec 07-Jan 08, 850K
    – Dec 06-Jan 07, 1,158K
    – Dec 05-Jan 06, 652K
    – Dec 04-Jan 05, 845K

    Like most of the “recovery” news, this is a case of “not as horrible as last year, but still not good at all in historical context.” A sufficiently wide and deep recovery wouldn’t come with that much of an increase in a January.

    Comment by TBlumer — February 5, 2010 @ 12:03 pm

  6. #2, It’s not so much that smaller state and local governments bother me, but that they are shrinking (however small in context) at the same time the federal government is rising. If they were both coming down at the same time, it’s good. But as a long term trend, this current mirror/mirror dichotomy is pretty scary. There’s already too much legitimate functions of government being usurped from the states and shuffled onto the federal level. Hopefully, this is just a fluke and hopefully the shrinkage so far was on non-essential items that needed to shrink. But once that rise and shrink gets too deep, look out. Hopefully it won’t.

    Comment by zf — February 5, 2010 @ 12:58 pm

  7. #5,

    Hahaha, yeah, the Dec 09 to Jan 10 period is not so bad on a seasonally adjusted basis when that basis was Dec 08 to Jan 09…where job losses were essentially twice normal. That’s really comforting.

    Sorry Tom, but I’m not inclined to cut the government slack when they show skewed statistics of declining percentage of unemployment when in fact unemployment is spiraling out of control. It’s rather like the captain of the Titanic consoling the passengers in the lifeboats (employed) that the percent of passengers stuck on the ship (unemployed 1 year) are falling into the icy water.

    Recovery? There is no recovery until companies start increasing profits, which will be quickly seen in tax revenue collections.

    Continual job loses, i.e. a shrinking number of employed people not the sign of a recovery. A point Tom that should be made is destinction between the number of actual employed and the number of unemployed, these two terms are NOT the reverse or reciprocal of each other as in a zero-sum equation. While “unemployment” may lag a recovery, the change in the “number of employed” should be a direct indicator in the GDP calculation as any loss of “employment” is a negative to the GDP calculation. Any gain of employment is a positive to the GDP calculation.

    I need to do a quick review of the “employed” number against recovery periods to confirm my hypothesis.

    Comment by dscott — February 5, 2010 @ 4:18 pm

  8. According to NBER recent recessions:

    July 1990(III) was the peak and March 1991(I) was the bottom.
    March 2001(I) was the peak and November 2001 (IV) was the bottom.
    December 2007 (IV) was the peak and the bottom yet to be determined.

    So looking at the BLS “A” tables from 1990 to present “employment” was growing until Dec 08, with the normal peak in July due to part time summer employment. According to the A table, the number employed on an annual basis from 1989 to 2008, had no decreases for any of these recessions UNTIL Dec 2009.

    In fact, just for giggles I ran the chart back to 1948 as far as it could go, the only year in which the annual number of “employed” declined was 1951 prior to 2009.

    Looking at the 1951 period:
    NBER indicates there was NO RECESSION during that year at all, they report:

    November 1948(IV) as the peak and October 1949 (IV) as the bottom.

    July 1953(II) as the peak and May 1954 (II) as the bottom.



    The NBER does not define a recession in terms of two consecutive quarters of decline in real GDP. Rather, a recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales. For more information, see the latest announcement from the NBER’s Business Cycle Dating Committee, dated 12/01/08.


    So Tom, the logical conclusion here given the uniqueness of this recession, it won’t be over until the number of “employed” stops dropping and a true recovery will not be occuring until the number of actual employed starts growing. As we discussed a while ago, given the huge numbers of part timers, employment is not going to grow until those jobs are converted to full time employment. The part time employment numbers are further skewing the “unemployed” numbers in addition to those reported “employed”. Furthermore holding NBER to it’s lastest definition, even with two so called quarters of GDP growth, they can not claim the recession is over until the “employed” number stabilizes. Quite frankly, if the Commerce Dept. reports a growth of GDP for the next quarter, I for one have no reason to believe their number bears any resemblance to reality given the people who are running the show at the current moment. The last reported GDP number is clearly a farce given the tax receipts cratering.

    Comment by dscott — February 5, 2010 @ 5:11 pm

  9. #7, I agree that this “recovery” is pathetically weak by historical standards, and runs a serious danger of re-recessing.

    #8, As much as I’d like to be inconsistent and root for NBER to extend the recession as they “define” it, I’d prefer that they just abandon the subjective stuff and accept it the way normal people define it, i.e., two or more quarters in a row of contraction. Of course, that would put them out of the recession-calling business (a good thing).

    But you’re right … in their convoluted way of looking at things, they would have a hard time making a case that the recession is over. But my bet is that they will, and they’ll say it was over in November, when the seasonally adjusted jobs number went positive.

    Comment by TBlumer — February 5, 2010 @ 6:51 pm

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