Friday, February 3, 2012

January Jobs Report

This morning's job report far exceeded expectations, indicating that the economy added 243,000 jobs in January (257,000 in the private sector) and the unemployment rate declined to 8.3%.  Jobs gains were widespread, evidence of a strengthening economy.  Does this mean that the economic recovery is beginning to shift into high gear?  Though this was a good report, there are some reasons to think that it overestimated the strength of the economy (to be discussed in another post).  Let's take a quick look at some of the key numbers:
  • The participation rate was 63.7%, setting a new low for this period and is the lowest since March 1983.  If it declines a little more (63.5%), it'll reach a rate not seen since the late 1970s.
  • The employment-population ratio remained at 58.5%, slightly above the recent low of 58.2% (last time it was this low was 1983).
  • The broad measure of unemployment (U6) declined to 15.1% (from 15.2%).
  • The household survey showed a surge in jobs, most of which were part time.  Full-time employment rose by 80,000 while part time rose by about 700,000.
Add it up and it's a good report, the best since last Spring, but before assuming that the economy is ready for take-off, one should examine it further and compare it to other reports about the economy.