January jobs report: another big miss
More “unexpected” developments in our five-years-and-counting state of perpetual economic surprise, as Forbes sizes up the January unemployment report:
Friday, the Bureau of Labor Statistics released another weaker than expected jobs report.
Employers added 113,000 jobs in January, well below the 185,000 economists expected. The unemployment rate, which is drawn from a different survey of households, was down slightly to 6.6% from 6.7% in December. The labor force participation rate ticked up to 63% from 62.8%. The employment-population ratio was up to 58.8% from 58.6% in the prior month.
Employment numbers were revised up just 1,000 for December bringing the headline number from plus 74,000 to plus 75,000. The November payroll number, however, was revised up more sharply from 241,000 to 274,000, total employment gains those months were therefore 34,000 greater than previously reported. In 2013 an average of 194,000 jobs were added each month, above 2012′s 183,000 average monthly gains.
Is it supposed to be good news that the struggling sorta-kinda recovery that was beginning to stir in Fall 2013 fell off an even steeper cliff than we thought in December? December is not usually a month in which jobs are aggressively shed… unless, of course, there’s a huge job-killing government program dumping mandates on business in the following year.
As always, the people who didn’t see this report coming insist that we should read too much into it. Five years of consistently disappointing data isn’t really enough to take the full measure of Obamanomics, apparently. Forbes found someone who, unlike most of the experts, did expect a disappointing January report, and put the blame squarely on a swarm of enigmatic “anomalies.”
Scott Brown, chief economist at Raymond James, said over the phone that the numbers should be taken “with a big grain of salt.” Adding, “Some people are making a big deal about the slower pace over the last couple of months, but again I think the season adjustment is really quite strong.”
Brown calls the the results unsurprising because there was so much uncertainty leading up to the January report. In addition to inclement winters weather and seasonal adjustments, there were benchmark revisions and a methodology change surrounding elder care home workers. “All these different anomalies push the numbers around in different directions. When you look the seasonal pattern in employment you always see a big drop in jobs after the end of the holiday shopping season. Then you are going to look to March, April, May to see firms really ramping up their hiring.”
Cold weather in the winter is an unpredictable anomaly now? (Actually, I’ve noticed a larger than usual number of media reports debunking the idea that weather played a big role in the January disappointment; I don’t think that excuse is going to fly any more. Among other inconvenient facts, as ZeroHedge points out, the industry normally most affected by poor weather – construction – actually gained jobs in this generally limp report.) The “big drop in jobs” we’re charting didn’t begin at the end of the holiday season; it began during its peak month. As for the ramping up firms might be doing in the spring, we shall see, but that’s getting perilously close to the job-destroying impact of that long-delayed ObamaCare employer mandate. Maybe it will get delayed again. Why the heck not? The rest of this “law” is written in pencil, as far as the executive branch is concerned.
One might look at the string of poor job reports and conclude that maybe the business sector gets a bit nervous when it sees politicians rewriting the rules according to their imperial whim. Interestingly, the health care sector – which prominent Democrats have assured us will soon explode with new jobs, balancing out the other jobs lost due to ObamaCare – remained flat.
In a note following the report, Kathy Bostjancic, director of macroeconomic analysis for The Conference Board, also tried to put a positive spin on the series of reports that she says “likely spark uncertainty about the strength of the labor market and direction of the overall U.S. economy.” She noted that the three-month payroll average remains strong at 168,000. Reiterating that winter weather played a clear roll in the December results, and to some extent January results, she said The Conference Board expects job gains to rebound to a 180,000 to 200,000 pace once the weather returns to normal.
“The signals from the latest survey of purchasing managers and The Conference Board’s Leading Economic Index point to continued moderate job gains over the next few months, in an improving economic environment,” wrote Bostjancic. “Indeed, if these job gains, and the pay checks they generate, lift consumer sentiment and support spending on replacement vehicles and household appliances and furnishings, it will indeed be an improving economic environment. And if demand is improving, business will respond by investing so as to supply the goods and services in demand.”
168,00 jobs on average is not “strong growth,” or even a prelude to strong growth; it’s treading water, roughly comparable to population growth. (And that three-month average looks a lot less appealing when it consists of one decent month followed by two screaming plummets into the abyss.) There aren’t any job gains and paycheck bounties “lifting consumer sentiment”; on the contrary, the very same unemployment report says retail sales were disappointing during the holiday season.
The demographic distribution of unemployment is also discouraging; the 18-29 age bracket still has a 15.8 real unemployment rate, coupled with a continuing exodus from the workforce. According to Generation Opportunity’s calculations, the unemployment rate for black youths is a horrifying 23.9 percent. Eight years of Obama is turning people who should have entered the workforce when he entered the Oval Office into a lost generation, which is not only looking at a crushing student loan debt burden, but an even more crushing national debt burden they will not be able to pay, and won’t be allowed to leave unpaid. And now they’re listening to the Democrat Party shriek in unison that work is slavery and unemployment is liberation, as they try to spin away the devastating Congressional Budget Office projections for the future of ObamaCare.