It was a Groundhog Day kind of jobs report.
By DIANE STAFFORD
The Kansas City Star
Even with revisions that said 2012 job creation was better than first thought, the January numbers released Friday played out like the Bill Murray movie that repeats each day nearly endlessly.
Each month we wake up to the same report, with all the indicators employment, unemployment, labor force participation, hours, wages painting the same picture over and over, said Heidi Shierholz, economist at the Economic Policy Institute.
At this rate, it will be years before the job market fully recovers.
In the first month of 2013, employers added 157,000 jobs, similar to the net gains reported month after month during the tepid recovery of the last three and a half years. January unemployment was estimated at 7.9 percent, up a tick from 7.8 percent in December but about what its been since September.
I guess were still in the uncertainty camp, said Jeff Pinkerton, an economist with the Mid America Regional Council. Weve slogged through the uncertainties of health care reform, the election, the fiscal cliff, and well have some of the same debates again in March facing federal spending cuts. Business hasnt been looking aggressively to expand.
Still, the stock market responded positively, seeing the increased number of jobs as proof that another recession was not at hand despite this weeks surprising news that the Gross Domestic Product shrank slightly late last year. The Dow Jones Industrial Average, also heartened by good auto sales numbers, moved above 14,000 for the first time since 2007.
Pinkerton said he took heart in rising construction employment and indications that consumers feel better about the economy, especially because home values are beginning to rise again.
Positives in the jobs report were found in the revisions to previous data. In a regular statistical exercise, the U.S. Bureau of Labor Statistics updated previously estimated job numbers, based on population changes and more accurate payroll reports.
The revisions said employers added 127,000 more jobs in November and December than reported previously. Also, net job growth averaged 181,000 a month last year, an improved annual average from 2011.
As of now the U.S. job market has recovered 5.5 million of the more than 8.7 million jobs that vanished. Economists point out that the U.S. needs to create many more jobs than 8.7 million to keep up with population growth. And a 181,000 jobs-a-month pace last years average means that job creation is still woefully underperforming and could drag out the weak recovery for years.
The good news for January was that private sector employment grew for the 35th straight month. That created a net job gain of more than 6.1 million, or about 175,000 a month over that time.
Retail and construction employment were especially strong in January.
The strong and steady job gains from retail trade and construction looks a lot more like a normal economic expansion, where these categories typically lead, said Scott Anderson, chief economist at Bank of the West.
Those gains, though, continued to be partly offset by job cuts in the public sector. Government shed about 9,000 jobs, with about half in the U.S. Postal Service.
Since the recovery began in June 2009, 721,000 jobs have been cut from the public sector, with about half the losses in local public K-12 education.
Across the economy, however,it appears that the job creation rate trend is about 150,000 to 160,000 per month, consistent with an economy growing at around 2 percent, reported Maninder Sibia and Steven Wood, economists with Insight Economics.
Fewer in job hunt
What worries economists more is that the labor force participation rate the share of working-age Americans who are working or looking for work is just 63.3 percent, near its historic low.
Unemployment would have been worse had not even more adults 169,000 chosen to join the ranks of those neither working or seeking employment, said Peter Morici, an economist at the University of Maryland.
People have to be working or actively looking for work to be counted as a member of the labor force.
In the weakest recovery since the Great Depression, most of the reduction in unemployment from its 10 percent peak in October 2009 has been accomplished through a significant drop in the percentage of adults working or looking for work, Morici said.
Analysts also note that most workers were hit this month with 2 percent increases in Social Security payroll taxes plus a sudden spurt in gasoline prices. The combination is expected to crimp consumer spending, which fuels three-fourths of the U.S. economy.
Unfortunately, Congress appears once again poised to make matters worse, with automatic budget cuts that will inflict harm on the economy, said Christine L. Owens, executive director of the National Employment Law Project, which advocates for workers.
The January report said average hourly wages rose 4 cents to $23.78, up 2.1 percent over the last 12 months. That was better than the 2012 inflation rate of 1.7 percent.
The average work week was unchanged at 34.4 hours.
According to Chris Williamson, chief economist at Markit, underlying demand for labor continued to expand despite the slower fourth-quarter economic growth rate, which he attributed to a steep fall in defense spending, inventory reduction by companies and Hurricane Sandy. Exports also fell.
Uncertainty over how Congress will resolve the mandatory federal spending cuts continues to be a drag on employer optimism.
But, William said, the employment data provide reassuring evidence that the U.S. is not falling back into recession.
The data showed, though, that many Americans continued to face economic hardship. About four in 10 of the unemployed, 4.7 million out of the 12.3 million, have been out of work for six months or more and are having the most trouble finding a job.
Critics of the Labor Departments official unemployment rate say that the more accurate economic picture is found in the bureaus alternative measures of labor underutilization.
Those figures put unemployment as high as 14.4 percent in January, reflecting workers who are employed part time not by choice, and discouraged workers who have temporarily stopped looking for work.
Millions of the unemployed have exhausted all of their unemployment benefits, and many are without even subsistence income.
Staying the course
Because the pace of job growth remains modest, Federal Reserve policy makers this week said they were sticking to their monetary policy guns.
The central bank said Wednesday that it will continue buying securities to support economic expansion and hold its target interest rate near zero as long as joblessness stays above 6.5 percent and inflation is below 2.5 percent.
On Thursday, President Barack Obama let the two-year charter expire of his blue-ribbon job advisory council of business leaders.
Republicans criticized the disbanding, but the council had met only four times and had produced few recommendations that were implemented.
Looking forward, the Society for Human Resource Management said it expected hiring activity in February to reach a four-year high in manufacturing.
It said 47.2 percent of manufacturers and 33.1 percent of service-sector employers plan to add jobs this month.
|Annual average unemployment rate|
|Average monthly employment change|
U.S. Bureau of Labor Statistics
To reach Diane Stafford, call 816-234-4359 or send email to firstname.lastname@example.org.