The “official” jobs report released Friday shows that the un-employment rate continues to fall reaching 6.6% — the lowest in five years as 113,000 jobs were added to the economy. The labor participation rate also increased slightly in January according to the Bureau of Labor Statistics (BLS). Economists expected to see 181,000 new jobs, however.
As anticipated, the BLS adjusted previously reported job totals for November and December now that the data is in. The November number was revised up from 241,000 jobs reported at the time up to 274,000; December was revised from 74,000 to 75,000. With these revisions, employment gains in November and December were 34,000 higher than previously reported. The revisions bring the totals closer to private sector numbers reported by ADP for those months.
One thing that sticks out in the report is the large number of government workers that lost their jobs last month. According to the BLS, 29,000 public sector workers were cut as part of continued austerity programs. The federal government cut 16,000 jobs including 4,000 postal workers. This was the largest single-month cut in what has been a five-year decline in the number of non-military federal employees.
State and local governments also reduced their work forces. State governments eliminated 8,500 jobs while local governments cut 11,500 workers including 8,700 teachers. If government employment would have remained steady, the total job numbers would be closer to normal.
Another thing the weaker-than-expected numbers show is that there is no correlation between deficit reduction and job creation as many politicians like to assert. The CBO reports that the deficit has dropped to a pre-recession level, but job creation has not increased. In fact, the weak numbers indicate that cutting government spending actually costs jobs, it does not create jobs. Most economists have argued this all along but Republicans in Congress refuse to listen.
After accounting for the annual adjustment to the population controls, the BLS reports that the civilian labor force rose by 499,000 in January, and the labor force participation rate edged up to 63.0 percent. The number of long-term unemployed persons declined by 232,000 in January to 3.6 million. These are individuals who have been jobless for 27 weeks or more. The long-term unemployed accounted for 35.8 percent of the unemployed; however, the number of long-term unemployed has declined by 1.1 million over the year.
The number of persons employed part-time for economic reasons (sometimes referred to as involuntary part-time workers) fell by 514,000 to 7.3 million in January. This continues to debunk assertions that Obamacare is causing employers to reduce the hours of their workers on a large scale.
The unemployment rate for adult men was 6.2 percent, adult women 5.9 percent, whereas for teenagers it remains high at 20.7 percent. Once again there is a racial component to unemployment — it is continues to hit minorities harder than whites. Unemployment for blacks is 12.1 percent, Hispanics 8.4 percent, whereas for whites it is 5.7 percent. The jobless rate for Asians is 4.8 percent, down by 1.7 percentage points over the year.
Mark Zandi, chief economist for Moody’s Analytics told NBC’s Chuck Todd Friday morning that he believes the low job numbers are the result of bad weather, and this will bleed into February as well due to continued storms. Zandi said the economic indicators are strong.
Construction added 48,000 jobs in January, more than offsetting a decline of 22,000 in December. Manufacturing increased employment by 21,000 in January as well. Manufacturing added an average of 7,000 jobs per month in 2013. Wholesale trade added 14,000 jobs, with most of the increase occurring in nondurable goods up by 10,000 jobs.
Mining added 7,000 jobs compared with an average monthly gain of only 2,000 jobs in 2013.
It will be interesting to see how the new Federal Reserve Chair, Janet Yellen, responds to the job numbers. One thing certain, America is ready for warm weather.