By Mark Vitner, Senior Economist
There was little evidence of a pause in the labor market. Nonfarm employment increased by 157,000 jobs in January and data for the previous 21 months were revised higher. The unemployment rate rose to 7.9 percent.
No Evidence of a Pause
Even more attention than usual was focused on the January employment data following the surprising 0.1 percent drop in fourth quarter GDP reported earlier this week. Any concerns that the disappointing GDP number was a harbinger of a more serious slowdown were likely allayed by this morning’s numbers. Nonfarm employment increased by 157,000 jobs during the month, with gains evident across most key sectors. December’s job gain was also revised up to 196,000 net new jobs. Private sector job growth was a little stronger than that, with payrolls rising by 166,000 jobs in January, following gains of 202,000 jobs in December and 256,000 jobs in November. The bottom line is that from an employment perspective, January was pretty much a ‘steady as she goes’ kind of month.
The start of the year is always a tricky time to assess the job market. The Bureau of Labor Statistics (BLS) makes a number of adjustments to their calculations to incorporate new seasonal factors, improved “hard” employment data and better population estimates. We also have to deal with the reversal of temporary holiday hiring and this past year’s fiscal showdown. By most accounts the impacts from all of these factors were fairly minimal. Job growth remains on virtually the same path that it was on previously and key trends, like the budding recovery in residential construction, are still evident in the underlying data. Manufacturing also continues to rev up, with much of the lift coming from the motor vehicle industry.
Benchmark Revisions Reveal Stronger Job Gains
January’s employment report also contained revisions to the prior data dating back to March 2011. The new data have been revised to a March benchmark from the Quarterly Census of Employment and Wages and show that hiring has been stronger than the previously reported pace of around 150,000 jobs a month to a pace of around 180,000 jobs per month. With the revisions the recovery looks m durable. The stronger pace of hiring may also help explain how the economy successfully navigated around the uncertainty and fiscal cliffhangers over the past couple of years.
The BLS also incorporated their annual population adjustment to the household survey. The change had little impact on the data. The unemployment rate rose 0.1-percentage point in January. The labor force participation rate and the employment-population ratio were both unchanged during the month at 63.6 percent and 58.6 percent, respectively. While the unemployment rate rose slightly in January, the jobless rate remains 0.4 percentage points lower than it was one year ago. Moreover, the number of people out of work for six months or longer has declined nearly 15 percent over the past year, falling from 5.5 million to 4.7 million.