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Unemployment rate drops to 6.7% in December lowest in 6 years

Unemployment rate drops to 6.7%. The revitalized auto industry gets some of the credit.
Unemployment rate drops to 6.7%. The revitalized auto industry gets some of the credit.
Photo by Bill Pugliano/Getty Images

The Bureau of labor Statistics (BLS) released the official jobs report Friday. The good news is that the unemployment rate has dropped to 6.7%--the lowest rates in 5 years. The BLS reported that 74,000 jobs were added to the workforce. The reason for the drop in unemployment is because the number of unemployed persons declined by 490,000 in December.

Over the last year, the number of unemployed persons has declined by 1.9 million persons or a drop of 1.2%. At this time a year ago, the unemployment rate stood at 7.9%.

The unemployment rates for adult men declined to 6.3 percent. Likewise, the number of unemployed whites dropped to 5.9 percent. The jobless rate for Asians was 4.1 percent, down by 2.5 percentage points over the year. Other groups were still treading water. The unemployment rate for adult women remained at 6.0 percent, teenagers at 20.2 percent, blacks at 11.9 percent, and Hispanics at 8.3 percent with little change for these groups.

The number of persons employed part time for economic reasons was essentially unchanged at 7.8 million in December. These individuals were working part time because their hours had been cut back or because they were unable to find full-time work.

Economists expected job growth 200,000 jobs for December. ADP reported a gain of 238,000 private sector jobs in December. ADP only tracks private sector jobs, not government jobs. The BLS reported 13,000 public sector jobs wee lost in December.

The BLS revised its previously reported job totals for November upward by 38,000. At the time, the Bureau reported that 200,000 jobs were added, the actual number was 241,000. It is likely that the December numbers will be revised next month as well.

Mark Zandi, chief economist of Moody’s Analytics said on MSNBC Friday morning that he did not believe the low job numbers for December. He said they will most certainly be revised because they are not at all consistent with other economic data including the ADP report. He said everything is in place for a much improved economy in 2014. It will be a very good year, he told Chuck Todd.

Employment in retail trade rose by 55,000 in December. The retail trade sector added an average of 32,000 jobs per month in 2013. Last month, the wholesale trade sector added 15,000 jobs. Wholesale trade added an average of 8,000 jobs per month in 2013.

Professional and business service employment continued to trend up adding 19,000 new workers. In 2013, job growth in professional and business services averaged 53,000 per month.

Manufacturing continued to trend up in December with an increase of 9,000 jobs. Manufacturing added 77,000 jobs in 2013. Employment in mining edged up 5,000 jobs in December. The industry added 29,000 jobs over the year.
Health care employment changed little in December. Employment gains in the industry averaged 17,000 per month in 2013. Employment in the information sector fell by 12,000 in December, driven by a decline of 14,000 jobs in the motion picture and sound recording industry

Construction employment edged down in December losing 16,000 jobs. However, in 2013, the industry added an average of 10,000 jobs per month. This number is the opposite of the ADP Report. ADP gets its information from employers in the industry.

Employment in other major industries, including transportation and warehousing, financial activities, leisure and hospitality, and government, changed little in December.

Although the unemployment rate is dropping, the bad news is that the number of long-term unemployed (those jobless for 27 weeks or more), is still 3.9 million. These individuals accounted for 37.7 percent of the unemployed. The number of long-term unemployed has declined by 894,000 over the year, but that is little consolation to the 3.9 million who are losing their unemployment benefits on top of not having a job.

This report shows that the economy is improving, but too many still need jobs. Unfortunately, Congress is likely to do nothing to add jobs. In fact, its failure to extend unemployment benefits will kill 240,000 jobs in the economy as millions of consumers will have less to spend on goods and services. Now, we need to see what happens next month.

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