The Bureau of Labor Statistics released their Employment Situation report for January today. The household survey data indicate a fall in the unemployment rate, however, this appears to be as much due to updated population controls as much as any other factor. As well, we have to wonder if declines in labor force indicate that potential workers are giving up on the labor market.
Reviewing the Establishment survey, which is not impacted by population measurement issues, we see continued job gains, barely. December’s gain of 121 thousand (revised up 18 thousand) fizzled to 36 thousand in January. The public sector lost 14 thousand jobs, offsetting the 50 thousand job gain by the private sector. In the goods producting categories, durables manufacturing had a good month at 62 thousand jobs gained, which was offset by declines in construction and non-durables manufacturing. In the services producing categories, retail, professional, and health services were all up, while transportation, warehousing, and financial were all down.
Despite the fact that the unemployment rate has fallen, I see this as a weak economic report. There is still job weakness in those sectors related to the Great Recession, construction and finance. And, overall job gains are still very weak. The recovery is weakened as a result, since low wage and salary income gains imply fewer expenditures on consumption and fewer savings contributions to the banking system.