State of the Job Market - January 2014
- In January, the number of jobs at establishments expanded only 113,000, according to the Bureau of Labor Statistics (BLS). This was slower than the 194,000 average monthly increase in the 12 months through November 2013. This news seems to run counter to other information pointing to faster economic growth since last summer and decent labor market trends. The economy accelerated to a 3½ to 4 percent annualized pace in the second half of 2013. Layoffs have fallen back to very low levels. The alternative ADP survey of jobs at private establishments continued to increase at a trend-like pace through January. And the number of people employed that is based on the government’s survey of households surged to 638,000.
- The dichotomy between the nonfarm payroll estimates and other perspectives remains a conundrum. Bad weather dampened employment in December, but, when the BLS survey was taken, the weather in January was unusually mild, so it likely did not distort the January jobs figures, which was evident in the 48,000 surge in construction employment.
- Although the survey of establishments was generally downbeat—employment at retail establishments, businesses providing private education services, and the government sector contracted and the job count at businesses services did not recover fully from the December lull—the alternative survey of households recorded strong gains in the labor force and employment. As a result, the unemployment rate fell to 6.6 percent. The unemployment rate may have been depressed by the expiration of extended unemployment benefits on December 31, 2013.
- And, auxiliary information from the Household Survey, although volatile on a month-to-month basis taken at face value, was upbeat. The number of people unemployed for more than six months fell more than 200,000 in January to 2.3 percent of the labor force, continuing a favorable trend that got under way last year. The number working part time for economic reasons—they can’t find full-time work—fell 500,000 in January. And a measure based on the Household Survey information that is adjusted to match the coverage and concept of the nonfarm payroll figure rose 901,000 in January.
- Special Note: The level of nonfarm payrolls was realigned, as they always are once a year, based on more comprehensive data (reports filed with the unemployment insurance system). This year’s annual revision included a technical addition of 466,000 jobs in private household services that in the past were not included in the survey of establishments and added to the Education and Health Care Services count and, beyond that, a downward revision of 119,000 as of March 2013.
- January’s jobs report is unlikely to slow the Federal Reserve’s plan to continue to wind down its asset purchases from $65 billion monthly at present to $55 billion at the March 18-19 policy meeting.
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