Employment Situation (January 2014) Published by Bruce Steinberg

Quick Recap

The unemployment rate continue to decline in January to 6.6 percent, which was “sort of” a 0.1 percent decrease from December that the official U.S. Bureau of Labor Statistics announcement characterized as “little changed.” The reason we say “sort of” is because the population estimates were updated so earlier data are not strictly comparable to earlier periods. It was 7.9 percent one year ago.

Private sector job growth was 142,000, which was below most analysts’ expectations as well as other private sector estimates. But total nonfarm job growth was only 113,000 when factoring in a 29,000 drop in government jobs (see more detail below).

This report also incorporates the BLS’s annual revisions to the jobs data, which showed that about 500,000 more jobs were created in 2013 than previous reported.

Jobs Report

The number of jobs in the private Goods-producing sector grew by 76,000 in January, which was an obvious improvement from December’s decline of 13,000 and only slightly better than November growth of 68,000.

  • The Construction sector bounced back in January with 48,000 new jobs after throwing 22,000 into the trash bin (or declined for those who may be confused by our analogy) in December.
  • Manufacturers were able to put together 21,000 more jobs in January, which was an improvement from December’s growth of only 8,000. Motor vehicles and parts manufacturers added 4,700 jobs as Computer and electronic product manufacturers deleted 2,300 jobs.
  • Mining and logging added 7,000 jobs last month courtesy of its mining sub-sector that was able to discover 7,200 new jobs in January.

The private Service-providing sector had a relatively bad January with a net gain of only 66,000 jobs in January after adding 102,000 in December and double that number, or 204,000, in new jobs in November.

  • The Retail trade sector — no doubt the job number was the result of the end of the holiday season — returned (declined) 12,900 jobs to the employment economy after growth of 62,700 in December.
  • Wholesale trade continued to recover by bringing in 13,900 more jobs in January after adding 10,200 in December.
  • The Transportation and warehousing sector grew by 9,900 jobs in January after adding 10,600 in December and 32,400 in November.
  • Financial activities continued to adjust their balance sheets of jobs with a decline of 2,000 in January after adding 3,000 in December, but subtracting 4,000 in November.
  • The Professional and business services sector’s growth improved in January (was up 36,000) from December’s rather anemic gain of only 4,000 jobs after adding 73,000 in November. Computer systems design and related services added 4,700 jobs in January after adding only 1,100 in December. Management and technical consulting services, which is a smaller sector, grew by less than 1,000 jobs in January after adding 4,100 in December.
  • The Education and health services sector lost a total of 6,000 jobs in January driven by the sector’s highly seasonal Educational services sub-sector declining by 7,700. So growth in the Health care and social assistance portion was weak at only 1,500; Home health care services, which had lost 3,000 jobs in December grew by less than 1,000 in January.
  • Leisure and hospitality sector picked up the pace a little with 24,000 new jobs in January after growing by 20,000 in December.
  • Government jobs were down by 29,000 jobs. The federal government shrank by 12,000 that was delivered courtesy of the USPS canceling 8,500 jobs; State government also shrank by 2,000; and Local government was down by 11,000, although that was driven by a 8,700 job decline in local education.
  • local education.

Temporary Help Services Roundup

The BLS’s annual revisions played a little havoc with the Temporary help services jobs data but what was true is still true, but by not as much as previously reported. In January, Temporary help services grew by 8,100 jobs to a record 2,779,800. This was growth of 0.3 percent increase from December and a 9.0 percent increase from January 2013. Incidentally, December month-on-month growth was revised to up only 30,100 jobs compared to the old series that showed a 40,400 increase.

Because of the upward revised in total nonfarm employment, Temporary help service’s market share — that is its portion of all jobs — in January was 2.02 percent, which was a slight increase from December’s value, but still not as high as April 2000’s 2.03 percent. To see a chart of Temporary help’s growth from 1991 to
January 2014 and comparing it to total employment, click here

Steinberg_chart 1

With the publication of final 2013 employment data, let’s look at the performance of temporary help services on an annual basis. As seen in the chart below, the sector’s growth continues, but at a decelerating rate since 2010 when growth resumed after the recession. Although we except the sector to continue to grow as long as there are no big shocks to the underlying economy, growth rates will likely continue to moderate.

Steinberg 2

Household Survey

The December 6.7 percent unemployment rate was definitively lower than the 7.0 percent of November and also a nice improvement from the 7.9 percent of December 2012. The 6.6 percent unemployment rate in January 2014 was lower than the 6.7 percent of December and also a nice improvement from the 7.9 percent of January 2013.

However, as mentioned at the top of this column, the population estimates from which the employment ratio and unemployment rate data are generated were revised this month. Therefore strict comparisons / changes from the previous month’s numbers would be misleading, so we’ll stop that discussion here.

The employment-to-population ratio was unchanged at 58.8 percent in January (was 58.6 percent a year earlier) as the labor force participation rate was 63.0 percent in January (was 63.6 percent in January 2013). In addition, the number of discouraged workers was up slightly to 837,000 in January 2014 from 804,000 a year earlier.