March 9, 2012

Inside February’s BLS Jobs Report

March 9, 2012

Inside February’s BLS Jobs Report

This is my monthly look inside the BLS Employment Situation Report.

– Headline Nonfarm jobs was +227,000.
– Revisions to December and January added 61k jobs meaning that the gain was really +288,000.
– Unemployment Rate was unchanged at 8.3% in January 2012
– Average hourly wage $23.31 up from $23.29 in January 2012
– Average work week was 34.5 hours the same as 34.5 in January 2012
– Private jobs were +233,000. Government jobs were -6,000
– 45,200 of these new jobs were temporary. This is well above the trend which had been 13,800, 18,700, 32,100 in the three months previous. The ability to make these temp jobs permanent is important to jobs growth.

Reading beneath the surface:

-Good producing jobs were +24,000.

-The size of the civilian labor force rose/fell from 154,395,000 to 154,871,000.

-The labor participation rate (percent of adult non-institutionalized population who are part of the labor force) rose to 63.9% from 63.7%. It was 64.2% a year ago.

According to the 4 week moving average of Initial Jobless Claims 1,420,000 people lost their jobs in the last 4 weeks. That normalizes to 1,538,000 lost jobs in a month (there are about 13 4 week periods in a 12 month year.) This is down from the previous month’s 1,637,000 lost jobs/month.

If 1,538,000 people lost their jobs last month and we gained 227,000 jobs, how did that happen? The answers are in the Household Survey.

In February 2012 BLS measured 4 sets of people entering or leaving the jobs market:

– Job losers and persons who completed temporary jobs was 7,209,000 down 112,000 from January’s Job Losers and down 1,128,000 from February 2011.

-Job leavers was 1,031,000. This includes anyone who retired or voluntarily left working. This was up 92,000 from previous month and up 127,000 from February 2011.

-Reentrants was 3,361,000. Reentrants are people who were looking for a job a found one. This was +36,000 from previous month and -+7,000 from February 2011.

-New entrants were 1,392,000. These are unemployed persons who never worked before and who are entering the labor force for the first time. This was +139,000 from previous month and +77,000 from February 2011.

In summary:

It appears that we are past the worst part of the jobs market cycle. People are not losing their jobs at the same rate as a year ago partly because temps are not getting dismissed at the same rate.

According to the BLS Household Survey, the U.S. population grew by about 2,700,000 in the past 12 months. The Civilian Noninstitutional Population has grown from 238,851,000 to 242,435,000 in the past year. This averages 298,670 per month. That labor participation rate (civilian labor force/Civilian noninstitutional population) is 63.9%. 298,760 * .639 = 190,850. That means that we need 190,850 more jobs every month to keep the labor participation rate flat.

In other words, 84% of February’s 227,000 headline jobs growth serves only to accommodate the increase in population.

Considering how far we are into recovery and how much has been spent, I find this data disappointing.