February 3, 2012

Inside January’s BLS Jobs Report

February 3, 2012

Inside January’s BLS Jobs Report

This is a look inside the BLS Employment Situation Report for January 2012.

– Headline Nonfarm jobs was +243,000. Consensus was 135,000
– Unemployment Rate was 8.3% down from 8.5% in December 2011
– Average hourly wage $23.29 up from $23.24 in December 2011
– Average work week was 33.4 hours down from 33.7 in December 2011
– Private jobs were +257,000. Government jobs were -14,000

Reading beneath the surface:

-Good producing jobs were +81,000.

-The size of the civilian labor force rose from 153,887,000 to 154,395,000.

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

This is the part I find interesting: according to the 4 week moving average of Initial Jobless Claims 1,511,000 people lost their jobs in the last 4 weeks. That normalizes to 1,637,000 lost jobs in a month (there are about 13 four-week periods in a 12 month year.) This is up from the previous month’s 1,617,000 lost jobs/month.

The question is this: if 1,637,000 people lost their jobs last month and we gained 243,000 jobs, how did that happen?

The answers are in the Household Survey segment of the jobs report.

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

– Job losers and persons who completed temporary jobs was 7,321,000 down 281,000 from December’s Job Leavers and down 1,141,000 from January 2011.

-Job leavers was 939,000. This includes anyone who retired or voluntarialy left working. This was down 23,000 from previous month and up 25,000 from January 2011.

-Reentrants was 3,325,000. Reentrants are people who were looking for a job a found one. This was -74,000 from previous month and -26,000 from January 2011.

-New entrants were 1,337,000. These are unemployed persons who never worked before and who are entering the labor force for the first time. This was +61,000 from previous month and +84,000 from January 2011.

In summary: few people lost their jobs, fewer people left their jobs, more unemployed people got jobs, and more people entered the labor force for the first time.

The largest factor was that fewer people lost their jobs. The number of job losers each month is about 30 times the change in jobs. It may be the case that fewer temps were laid off. That would explain why initial jobless claims were up and job losers was down.

Fewer temps being laid off is an early sign of recovery in the jobs market. One concern is that inventory buildup continues to outpace consumer spending and unless consumer spending picks up, some of the gains seen here will be given back.