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Tea Leaf: A good jobs report

Published: Thursday, Feb. 9 2012 6:04 p.m. MST

After three years of essentially lousy employment reports, the January 2012 report was simply better. Job growth exceeded expectations, it occurred in almost every employment classification, hours worked in various sectors rose and the unemployment rate ticked down for the fifth month in a row.

The U.S. economy added an estimated 243,000 net new jobs during January. In addition, previously estimated job gains for the two prior months were revised higher by 60,000 jobs.

The nation’s unemployment rate declined again to 8.3 percent in January — the lowest in nearly three years — from 8.5 percent in December. The current 8.3 percent jobless rate compares to the 9.1 percent rate of one year ago, the 9.7 percent rate of January 2010, and the 7.8 percent rate during January 2009.

Please note that the consensus forecast of economists was for a rise of roughly 135,000 net new jobs in January, with the unemployment rate staying at 8.5 percent or moving higher to 8.6 percent, which just shows you how much we know (ouch!).

The Numbers

American goods producing employment rose by 81,000 jobs in January, led by an estimated 50,000 gain in manufacturing jobs, a 21,000 rise in construction jobs, and a 10,000 rise in mining and logging employment. The U.S. Department of Labor’s Bureau of Labor Statistics (BLS) reports the majority of the manufacturing employment rise was in durable goods manufacturing (products designed to last more than three years), including fabricated metal products, machinery, motor vehicles and parts.

Assembly line workers put in an average of 41.9 hours of work during the January survey week, the most since January 1998 (bloomberg.com). The durable goods manufacturing sector has added 418,000 jobs over the past two years as auto sales have rebounded nicely.

The construction sector added an estimated 21,000 net new jobs in January, following a gain of 31,000 jobs the prior month. Good weather in much of the country during January likely played a part in the employment rise. The number of people unable to go to work because of bad weather, a proxy for the climate’s effect on the labor market, was 206,000 last month, less than half the 424,000 average for the month since 1976 (bloomberg.com).

The mining and logging sector added another 10,000 jobs during the month. BLS reports that since a recent low in October 2009, mining employment alone has expanded by 172,000 jobs.

Private-sector service providing employment rose by 176,000 jobs in January, led by an estimated 70,000 gain in professional and business service jobs. Leisure and hospitality added 44,000 jobs. The food services component of the sector has added 487,000 jobs since a recent low in February 2010.

Education and health services employment rose by an estimated 36,000 jobs during the month. Wholesale trade added 14,000 jobs during January, with sector employment rising by 144,000 jobs since May 2010. Retail trade added 10,000 jobs during the month, with employment rising 390,000 jobs since December 2009.

Overall government employment fell by another 14,000 jobs during the month. That sector has lost 276,000 jobs during the past year, with job eliminations in local government, state government (excluding education), and the U.S. Postal Service.

Trivia

The estimated number of unemployed people (those actively seeking jobs within the past 30 days but unable to find one) declined sharply to 12,758,000 in January versus 13,097,000 in December. Of the total, 5.5 million have been without a job for six months or longer.

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