Tearing Apart January 2012 NFP data

Despite the cries of the permabears and Rick Santelli, this was unequivocally a strong NFP report. The headline numbers were 243,000 net jobs, as unemployment dipped to 8.3%. The Labor Pool increased — suggesting that the improvement was not the usual employee retirement and discouraged worked giving up looking for work.

When we go beneath the headlines, we usually see the data’s warts — not this time. Across the board this was a surprisingly strong report. BLS called described job growth as “widespread in the private sector, with large employment gains in professional and business services, leisure and hospitality, and manufacturing.”

As noted earlier, no single month matters as much as the overall trend — and the trend is unequivocally upwards for the better part of 3 quarters now.

Lets go to the details:

• Total nonfarm payroll employment rose by 243,000 in January. Private-sector employment grew by 257,000;
• Unemployment rate declined by 0.2 percentage points in to 8.3%; Its down by 0.8 point since August.
• The Household survey, used to measure Unemployment rate, added a whopping 491,000 jobs.
• The number of unemployed persons declined to 12.8 million, from over 16 million at the recession peak.
• Employment-population ratio rose to 58.5% in January (Seasonally adjusted)
• The average workweek for production and nonsupervisory employees on private nonfarm payrolls edged up by 0.1 hour to 33.8 hours.
• Average workweek for all employees was unchanged in January, but the manufacturing workweek increased by 0.3 hour to 40.9 hours (likely multi shift auto mfr); Factory overtime increased by 0.1 hour to 3.4 hours.
• Average hourly earnings for all private employees rose by 4 cents (0.2%) to $23.29. Over the past 12 months, average hourly earnings have increased by 1.9%
• November NFP was revised from +100,000 to +157,000; December NFP was revised from +200,000 to +203,000.
• Benchmarks were also revised upwards — as of December 2011, total employment was raised by 266,000 (231,000 NSA)

The Negatives?

• Unemployment rates for teenagers 23.2%; for blacks is 13.6%; Hispanics 10.5%
• Long-term unemployed (jobless for 27 weeks +) was little changed at 5.5 million — thats 42.9%
• Persons employed part time for economic reasons, at 8.2 million, changed little in January; 2.8 million persons were marginally attached to the labor force, and 1.1 million discouraged workers, essentially unchanged from a year earlier.
• Employment in information declined by 13,000, including a loss of 8,000 jobs in the motion picture and sound recording industry
• Employment in construction increased by 21,000 in January, likely a temporary blip caused by unusually warm weather — 206,000 people were unable to work due to weather, well below normal for this time of year.

The one dark spot is the nagging, persistently long-term unemployment data. I suspect that is as much due to secular trends than cyclical recovery and is unlikely to improve anytime soon.

All told, its tough not to like this NFP report. Markets surely do, with the Dow up 140.


Employment Situation Summary
BLS, Friday, February 3, 2012

Did Economy Really Create 500,000 Jobs?
Real Time Economics February 3, 2012

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