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Monday, July 15, 2024

Is job growth really rebounding?

A job seeker in Colorado (REUTERS/Rick Wilking)
A job seeker in Colorado
(REUTERS/Rick Wilking)

U.S. employment likely rebounded in January after being held back by cold weather the prior month, which would offer assurance that economic growth was not faltering.

Nonfarm payrolls are expected to have increased by 185,000 last month, according to a Reuters survey of economists, with the jobless rate seen holding at a five-year low of 6.7 percent. Economists also expect December’s paltry count of 74,000 net new jobs, viewed by many as an anomaly, to be raised sharply.

“We are far from having a booming economy, but we are growing increasingly confident that the economy is developing enough internal momentum to reach take-off velocity,” said Bill Hampel, chief economist at the Credit Union National Association in Washington.

A report on Monday showing a surprise drop in factory activity to an eight-month low in January spooked investors and fanned fears of a rapid cooling off in growth after the economy’s robust performance in the second half of 2013.

But a reading on the dominant services sector on Wednesday showed a fairly strong expansion in activity in January.

The monthly jobs report, always closely watched by financial markets around the globe, will serve as a tie breaker. The Labor Department will release the data at 8:30 a.m.

While economists anticipate the labor market fared much better last month, relentless freezing temperatures present a wild card.

“If we get another low, disappointing number, it will change the short-term economic outlook,” said Keith Hall, a senior scholar at Mercatus Center at George Mason University in Arlington, Virginia.

A brightening growth picture encouraged the Federal Reserve last month to move forward with a scaling back of its bond-buying stimulus. Officials at the U.S. central bank will be anxious to see payrolls snapping back from their weather-depressed December level.

While the unemployment rate is forecast holding steady, there is a risk it could decline even further in January because jobless benefits for more than one million long-term unemployed Americans expired at the end of December. If they have since given up the search for work, they would not be considered as being in the labor market and unemployed.


“If some long-term unemployed give up looking for work when their benefits run out, we could see another drop in the labor force participation rate,” said Hall, a former commissioner of the Bureau of Labor Statistics.

“Conversely, people who lost their benefits might be forced to take a less desirable job, moving them from unemployed to underemployed.”

The participation rate, or the proportion of working-age Americans who have a job or are looking for one, fell 0.2 percentage point to 62.8 percent in December, returning to the more than 35-year low hit in October.

A further decline could depress the unemployment rate, which is already flirting with the 6.5 percent level that Fed officials have said would trigger discussions over when to raise benchmark interest rates from near zero.

But policymakers have made it clear that rates will not rise any time soon even if the unemployment threshold is breached.

“The Fed will start to stress other measures of labor market slack in their guidance on when they are going to raise interest rates,” said Ryan Sweet, a senior economist at Moody’s Analytics in West Chester, Pennsylvania

The unemployment rate tumbled 0.3 percentage point in December, taking the drop in 2013 to 1.2 percentage points.

Friday’s report will include revisions to data on payrolls, the workweek and earnings going back to 2009.

The government said last year that the revisions to this data, which is drawn from a survey of employers, would likely show that 345,000 more jobs than previously thought were created in the 12 months through March 2013.

The report will also incorporate new population estimates. This means the employment and labor force figures that are derived from the government’s survey of households will not be comparable to December.

The private sector is expected to account for all the hiring in January. Government payrolls are seen holding steady.

Manufacturing employment likely rose for a sixth month, while hiring in the retail sector probably slowed after strong increases in the prior months.

While most economists think construction payrolls bounced back after being depressed by the weather in December, frigid temperatures last month may have pushed them down again.

Average hourly earnings likely rose by 0.2 percent after edging up 0.1 percent in December. The length of the workweek is seen steady at an average of 34.4 hours.


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7 thoughts on “Is job growth really rebounding?”

  1. “If I call you a conspiracy theorist, it matters little whether you have actually claimed that a conspiracy exists or whether you have simply raised an issue that I would rather avoid… By labeling you, I strategically exclude you from the sphere where public speech, debate, and conflict occur.”

    From, “Dangerous Machinery: ‘Conspiracy Theorist’ as a Transpersonal Strategy of Exclusion” by Ginna Husting and Martin Orr of Boise State University

  2. “anti-conspiracy people are typically prey to strong “confirmation bias” – that is, they seek out information that confirms their pre-existing beliefs, while using irrational mechanisms (such as the “conspiracy theory” label) to avoid conflicting information.”

    University of Buffalo professor Steven Hoffman

  3. If the ecomomy is doing so wonderfully, why is that my daughter has been out of work since June of last year and looks for a new job relentlessly but still cannot get a job to save he life? She is willing to take any job that comes along.

  4. [quote] Looks like I was spot on on everything except the increase in labor participation.

    You’re funny!

    [quote] People who think they know it all are especially annoying to those of us who do. . .

  5. Trying to hold back my laughter and my tears. Economists are either incompetent or are paid to lie. And the government is basically saying, “We are going to fudge the numbers with new estimates.”

    Retail is announcing major closings and flirting with bankruptcy. Manufacturing orders fell through the floor. Weather and the fact that still few to no one is buying new houses or building new retail stores has demolished construction. Government is still laying off. And we’re supposed to believe an increase in McJobs is going to overcome all of that?

    They really think we are that stupid!

    • [quote] Economists are either incompetent or are paid to lie.

      You know this as fact or is this one of your conspiracy thingies?

      Fact is the unemployment rate is edging down. The U.S. economy is projected to generate millions of new jobs in 2014. This will largely be due to the growing strength of the U.S health care system (oops, there’s that ACA creating jobs thing again). Add to that our booming energy and high-tech sectors. As to housing, it hasn’t been this good since way back in 2008.

      • Well Bill, I posted my predictions before the jobs report was released while you posted yours after the release, and still you were wrong. See: January jobs report disappoints again.

        Interesting how the government says education and health services dropped 6,000 jobs in January. So much for your ACA adding jobs claims.

        Looks like I was spot on on everything except the increase in labor participation. Seems it’s just a statistical anomaly of the bureau’s new calculation of population.

        I am finding it hard to believe that construction and manufacturing added so many jobs. This seems to fly in the face of reality of the bad winter and the lowered factory orders numbers. Could you imagine if they came out and reported only 57,000 jobs created when you take out construction and manufacturing?

        It would have caused another precipitous market fall, a double whammy this week which might have forced investors towards the doors. Certainly the market manipulators demanded these numbers be misrepresented. I expect this number will be revised lower in the future.

        You can take pride in your consistency Bill. Consistently wrong, but consistent none the less. I don’t enjoy being right about bad news, but I don’t mind it as much when I’m proven correct versus your “facts.”

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