Initial Reaction
Nonfarm Payrolls rose by 175,000 vs. a Bloomberg consensus expectation of 150,000.
The employment change for December 2013 was revised up by 9,000 (from +75,000 to +84,000), and the employment change for January 2014 was revised up by 16,000 (from +113,000 to +129,000). The overall effect was a modest two-month upward revision of +25,000.
Beneath the surface, things look worse again. The household survey shows a gain of employment of only 42,000 while unemployment rose by 223,000.
February BLS Jobs Statistics at a Glance
- Nonfarm Payroll: +175,000 - Establishment Survey
- Employment: +42,000 - Household Survey
- Unemployment: +223,000 - Household Survey
- Involuntary Part-Time Work: -71,000 - Household Survey
- Voluntary Part-Time Work: -138,000 - Household Survey
- Baseline Unemployment Rate: +0.1 to 6.7% - Household Survey
- U-6 unemployment: -0.1 to 12.6% - Household Survey
- Civilian Non-institutional Population: +170,000
- Civilian Labor Force: +264,000 - Household Survey
- Not in Labor Force: -94,000 - Household Survey
- Participation Rate: +0.0 at 63.0 - Household Survey
Additional Notes About the Unemployment Rate
- The unemployment rate varies in accordance with the Household Survey, not the reported headline jobs number, and not in accordance with the weekly claims data.
- In the past year the population rose by 2,257,000.
- In the last year the labor force fell by 213,000.
- In the last year, those "not" in the labor force rose by 2,253,000
- Over the course of the last year, the number of people employed rose by 2,044,000 (an average of 170,333 a month)
The population rose by over 2 million, but the labor force fell by over 200,000. People dropping out of the work force accounts for much of the declining unemployment rate.
February 2014 Employment Report
Please consider the Bureau of Labor Statistics (BLS)
February 2014 Employment Report.
Total nonfarm payroll employment increased by 175,000 in February, and the unemployment rate was little changed at 6.7 percent, the U.S. Bureau of Labor Statistics reported today. Employment increased in professional and business services and
in wholesale trade but declined in information.
Click on Any Chart in this Report to See a Sharper Image
Unemployment Rate - Seasonally Adjusted
Nonfarm Employment January 2011 - February 2014
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Nonfarm Employment Change from Previous Month by Job Type
Hours and Wages
Average weekly hours of all private employees declined 0.1 hours at 34.2 hours. Average weekly hours of all private service-providing employees declined 0.2 hours to 33.0 hours.
Average hourly earnings of private workers rose $0.09 to $20.50. Average hourly earnings of private service-providing employees rose $0.10 to $20.30.
For further discussion of income distribution, please see
What's "Really" Behind Gross Inequalities In Income Distribution?
Birth Death Model
Starting January, I dropped the
Birth/Death Model charts from this report. For those who follow the numbers, I keep this caution: Do not subtract the reported Birth-Death number from the reported headline number. That approach is statistically invalid. Should anything interesting arise in the Birth/Death numbers, I will add the charts back.
Table 15 BLS Alternate Measures of Unemployment
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Table A-15 is where one can find a
better approximation of what the unemployment rate really is.
Notice I said "better" approximation not to be confused with "good" approximation.
The official unemployment rate is 6.7%. However, if you start counting all the people who want a job but gave up, all the people with part-time jobs that want a full-time job, all the people who dropped off the unemployment rolls because their unemployment benefits ran out, etc., you get a closer picture of what the unemployment rate is. That number is in the last row labeled U-6.
U-6 is much higher at 12.6%. Both numbers would be way higher still, were it not for millions dropping out of the labor force over the past few years.
Labor Force Factors
- Discouraged workers stop looking for jobs
- People retire because they cannot find jobs
- People go back to school hoping it will improve their chances of getting a job
- People stay in school longer because they cannot find a job
- Disability and disability fraud
Were it not for people dropping out of the labor force, the unemployment rate would be well over 9%.
Synopsis
On the surface this month modestly beat expectation with a decent report of 175,000 jobs. Beneath the surface, things looked worse.
Recall that last month the BLS made a huge household employment revision of 369,000 for March of 2013.
I stated "
the revision is not indicative of the current state of hiring patterns." It's tough to judge from one month, but 42,000 seems really anemic. In two months, the year-over-year comparison effect of that revision will drop off.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
