Unemployment Falls to 5-Year Best 6.6%, But Job Creation Weakens to 113,000
FlaglerLive | February 7, 2014
The national unemployment rate continues its steady downward fall, to 6.6 percent in January–its best showing since the 6.5 percent rate recorded in October 2008, when it was on its way up–but for the second month in a row, job creation fell far short of expectations, to 113,000. It was a revised 75,000 in December, the worst successive two-month results in a year and a half.
The Labor Department’s jobs report is always based on two separate surveys: the so-called establishment survey, which is more reliable, and the household survey. The establishment survey polls 140,000 businesses and government agencies representing about 410,000 worksites. The separate household survey is based on data gathered from 60,000 households representing 110,000 individuals, still a far larger sample than virtually all opinion polls, which top off at 2,000 participants.
In contrast with the establishment survey this month, the household survey shows a sharp increase of 616,000 jobs, and a jump of 0.2 percent in the employment-population ratio. The household survey data this month reflects updated population estimates the Labor Department notes.
The alternative rate of unemployment–the so-called U-6 rate–which takes into account people who have dropped out of the workforce as well as people working part-time because they cannot find full-time work or have seen their hours cut back, also shows a sharp improvement, to 12.7 percent, the best rate since November 2008. It was 13.1 percent in December.
In sum, the January jobs report is a mixed bag, with more questions than answers. Those questions may not get answered until subsequent jobs reports.
Some 10.2 million American remain unemployed. But the civilian labor force rose by half a million people in January, and the labor force participation rate, which had been declining most months, rose back to 63 percent, after falling to a 62.8 percent the previous month. The rate is an indication of the number of people willing or able to work. It peaked in 1999 just above 67 percent, but has now returned to levels of the late 1970s and early 1980s, driven down in part by workers too discouraged to continue looking for jobs, but also by the retirement of baby boomers: the more people retire, the smaller the labor participation rate. Regardless of the strength of the economy, the rate is expected to continue to decline in coming years as bulk of baby boomers retire, unless immigration makes up for the attrition.
A few highlights by sector: Construction added 48,000 jobs over the month, more than offsetting a decline of 22,000 in December. Manufacturing employment increased by 21,000, wholesale trade added 14,000 jobs, mining added 7,000, professional and business services added 36,000, and leisure and hospitality 24,000. Health care, which was averaging 17,000 a jobs a month in 2013, added no jobs in January.
Employment in retail trade fell by 13,000. Federal government employment decreased by 12,000, much of it from a 9,000 job loss in the U.S. Postal Service. Employment in other major industries, including transportation and warehousing, information, and financial activities, showed little or no change over the month.
The average workweek for all employees on private payrolls was unchanged at 34.4 hours. Average hourly earnings rose by 5 cents to $24.21. Over the year, average hourly earnings have risen by 46 cents, or 1.9 percent.