The employment situation is a set of labor market indicators. The unemployment rate measures the number of unemployed as a percentage of the labor force. Nonfarm payroll employment counts the number of paid employees working part-time or full-time in the nation's business and government establishments. The average workweek reflects the number of hours worked in the nonfarm sector. Average hourly earnings reveal the basic hourly rate for major industries as indicated in nonfarm payrolls. (Bureau of Labor Statistics, U.S. Department of Labor) Why Investors Care
|
 |
|
||||||||||||||||||||
|
|
|
||||||||||||||||||||
Highlights
Today's employment report showed some slowing on the margin, although earlier numbers were revised up. Nonfarm payroll employment posted a 111,000 gain in January, following a revised 206,000 increase in December and 196,000 rise in November. The consensus had expected a 160,000 increase in payroll jobs for January. December's figure was revised up 39,000 from the initial estimate of a 167,000 increase and November was revised up 42,000 from the previous estimate of a 154,000 boost. Over December and November, the net revision was up 99,000. Nonfarm payroll employment is up 1.6 percent year-on-year for January.
The civilian unemployment rate edged up to 4.6 percent from 4.5 percent in December. The consensus forecast had called for no change in the unemployment rate. Household employment slowed sharply to a 31,000 increase in January, following a 303,000 surge in December. Household employment growth had been sharply outpacing payroll growth in 2006. The labor force rose 199,000 in January, while the number of unemployed increased 168,000. The employment-population ratio edged down to 63.3 from 63.4 percent in December.
In the payroll survey, the wage numbers paint a slowing picture for inflation pressures. Average hourly earnings decelerated to a 0.2 percent increase in January, following a 0.4 percent rise in December. January's figure was below the consensus forecast for a 0.3 percent gain. Average hourly earnings are up 4.0 percent on a year-on-year basis in January. The average workweek in January slipped to 33.8 hours from 33.9 hours in December. The consensus had expected no change in the workweek.
Within the payroll survey, gains were mixed but with advances mainly in services. Overall service-providing industries were up 104,000, following a 209,000 increase in December. Gains were led by professional & business services, up 25,000, and in government, up 14,000. Wholesale employment slipped 5,000. Goods-producing jobs rose 7,000 with construction up 22,000 and natural resources & mining up 1,000. Manufacturing jobs fell 16,000.
Aggregate hours in manufacturing dropped 0.8 percent in January, following no change December - indicating a weak month for industrial production.
Today's employment report shows the economy clearly on a soft landing. Employment growth is respectable and wages have softened. It is too early for the Fed to declare victory on inflation but the bond markets and equity markets will like today's report.
Nonfarm payroll employment was on the strong side in December with a 167,000 boost in December, following a revised 154,000 gain in November. These recent gains are likely too strong to ease tightness in the labor markets and to help ease wage inflation. In fact, average hourly earnings posted a sharp 0.5 percent increase in December, following a 0.3 percent rise in November. And the civilian unemployment rate remains low at 4.5 percent in December.
Nonfarm payrolls Consensus Forecast for January 07: 160,000
Range: 20,000 to 200,000
Unemployment rate Consensus Forecast for January 07: 4.5 percent
Range: 4.4 to 4.6 percent
Average workweek Consensus Forecast for January 07: 33.9 hours
Range: 33.9 to 40.0 hours
Average hourly earnings Consensus Forecast for January 07: +0.3 percent
Range: +0.2 to +0.4 percent
![[Chart]](chart.gif)
|
During the mature phase of an economic expansion, monthly payrolls gains of 150,000 or so are considered relatively healthy. In the early stages of recovery though, gains are expected to surpass 250,000 per month. |
![[Chart]](chart_1.gif)
|
The civilian unemployment rate is a lagging indicator of economic activity. During a recession, many people leave the labor force entirely, so the jobless rate may not increase as much as expected. This means that the jobless rate may continue to increase in the early stages of recovery because more people are returning to the labor force as they believe they will be able to find work. The civilian unemployment rate tends towards greater stability than payroll employment on a monthly basis. It reveals the degree to which labor resources are utilized in the economy. |
| 2007 Release Schedule | ||||||||||||||||||||||||||
|
powered by
![[Econoday]](../../../../../../../../../images/logo.gif){kind=logo}