Another Good Jobs Report Today
The BLS released the Employment Situation Summary for December today and it was another relatively good report overall. The U-3 unemployment rate decline again to 8.5% (8.3% without the seasonal adjustment) and the more inclusive (but not ideal) U-6 rate declined even more from 15.6% to 15.2%. The Establishment Survey portion of the summary (a survey of businesses) showed job creation of 200,000 for the month (212,000 private sector with a 12,000 loss from government) with strong input from logistics and distribution and manufacturing. October was revised up slightly and November was revised down slightly (November still gets one more revision next month). The Household Survey (the one we get the unemployment rate from) showed that the labor force participation rate stayed at 64% and the employment-population ratio stayed at 58.5%, although the number of discouraged workers fell (with the BLS noting that “Among the marginally attached, there were 945,000 discouraged workers in December, a decrease of 373,000 from a year earlier. (The data are not seasonally adjusted.) Discouraged workers are persons not currently looking for work because they believe no jobs are available for them.”). That is a pretty big decline and shows that while people may not be returning to the workforce in droves, they have appeared to have adjusted their lives so that working is no longer something they are considering pursuit of (ie retirement, stay at home parents, etc).
Overall, this was a pretty good report and showed that job growth is continuing (1.9 million private sector jobs created last year in the Establishment Survey) and may even be accelerating with the continued declines we have seen in the initial unemployment claims data that has been coming out (Thursday’s was down the the 370′s for the week, not seen since May of 08). I personally believe that the labor force participation rates are not going to climb much this year, as due to the severity and length of the recession, many of those that dropped out have likely made adjustments to their lifestyles (ie retirement/stay at home/etc) and will not have a desire to return to the workforce just yet (and this appears to be bearing out int the data with the large yearly decline in the discouraged workers numbers). With a labor force participation rate between 64 and 64.5, we should see continued declines in the unemployment rate with current levels of job creation. While not ideal, the economy should benefit as more people who want/need to work find jobs coupled with the reduction in debt levels we have seen on personal balance sheets.
Finally, make note of next month’s report, as it will feature the benchmark revisions to the last year of Establishment Survey data (based on actual tax returns). I expect this to show that the BLS actually UNDERESTIMATED job creation last year and that the revision will add to last years job creation totals.