Friday, February 7, 2014

January jobs- no disaster, just keep your eyes peeled

Today was a jobs Friday, and it was a somewhat blah one, with only 113,000 total jobs added in January, although the private sector had a decent gain of 142,000. Also noteworthy is that December's tame job gains were barely revised up (by 1,000, to 75,000), so it makes for two lower-than-trend months of job growth. Weather wasn't named as a major factor in the lower job gains, and in fact, some jobs you'd associate with warmer weather had big gains.

Job gains, January 2013, seasonally adjusted
Construction +48,000
Manufacturing +21,000
Food services and drinking places +14,800

Granted, these "gains" reflect lower-than-normal January layoffs, but it's still worth pointing out, as manufacturing in particular has had a very good run-up in the last four months (82,000 jobs added). Given how manufacturing-heavy Wisconsin is, you'd think this would translate into better gains here (and for the last quarter of 2013, it did).

On the flip side, the household survey had a huge increase (638,000 more listed as "employed" compared to December), which helped drive the unemployment rate down to 6.6%, the lowest it's been since late 2008. The employment-population ratio also jumped up 0.2%, to 58.8%, which is the highest it's been since August 2009.

Also important is this report is that January features the annual benchmarking of jobs numbers, as the BLS adjusts numbers based on additional data that has come in over time. Unlike previous years, the new benchmarks didn't change the story of overall growth for 2013.
These counts are derived principally from the Quarterly Census of Employment and Wages (QCEW), which enumerates jobs covered by the UI tax system. The benchmark process results in revisions to not seasonally adjusted data from April 2012 forward. Seasonally adjusted data from January 2009 forward are subject to revision. In addition, data for some series prior to 2009, both seasonally adjusted and unadjusted, incorporate revisions.

The total nonfarm employment level for March 2013 was revised upward by 369,000 (+347,000 on a not seasonally adjusted basis, or 0.3 percent). The average benchmark revision over the past 10 years was plus or minus 0.3 percent.

This revision incorporates the reclassification of jobs in the QCEW. Private household employment is out of scope for the establishment survey. The QCEW reclassified some private household employment into an industry that is in scope for the establishment survey—services for the elderly and persons with disabilities. This reclassification accounted for an increase of 466,000 jobs in the establishment survey. This increase of 466,000 associated with reclassification was offset by survey error of -119,000 for a total net benchmark revision of +347,000 on a not seasonally adjusted basis. Historical time series have been reconstructed to incorporate these revisions.

The effect of these revisions on the underlying trend in nonfarm payroll employment was minor. For example, the over-the-year change in total nonfarm employment for 2013 was revised from 2,186,000 to 2,322,000 seasonally adjusted.

So the overall change isn't very different, but let's plug in the new numbers from 2009 forward, and it'll show the slow but steady job growth in the U.S. over the last 4 years.

Dec 2009- Dec 2010- 1.058 million total jobs, 1.277 private sector
Dec 2010- Dec 2011- 2.083 million total jobs, 2.400 private sector
Dec 2011- Dec 2012- 2.236 million total jobs, 2.294 private sector
Dec 2012- Dec 2013- 2.312 million total jobs, 2.368 private sector

On a related note, Wisconsin and the other states will also be benchmarked at the next jobs state report, which we should see in about a month. As I mentioned in an earlier post, if the QCEW is an indication of what Wisconsin's new benchmark should be, this shouldn't change much when we see the update next month (if anything, it'd go down a small amount). And if true, this would keep the Walker jobs gap through the end of 2013 at nearly 43,000 total jobs, and over 52,000 in the private sector.

Looking ahead, I'm starting to fear that we're in a soft patch with the economy, and if wages don't pick up, our growth for earliy 2014 may not be as hot as a lot of the experts were saying. Of course, maybe it's all of these below zero nights that are bringing down my mood, and the underlying economy seems to be bumping along OK. With the state's surplus being projected in no small part due to a strong economic outlook and a booming stock market, it indicates to me that maybe we shouldn't count on all those dollars before they actually come in, and we certainly shouldn't be blowing tax cuts on revenue and job growth that might not necessarily happen.


  1. Good informational post, as always.

    Current state surplus vs future structural deficit? The $700 million++ 2015 deficit projected is purportedly calculated on 0% revenue growth. IF revenue growth exceeds 1.8% that deficit will disappear IF we trust the Walker math. I don't.

  2. bombadil- The catch is that the 0% growth scenario is 2015-'17, and it also assumes no change in expenses either. That part always gets left out by Walker and company.

    What it also doesn't mention is that it does assume strong revenue growth for the next 17 months (through June 2015), but no corresponding change in expenses. This is despite deficits in W-2 and Medicaid, and a few other things that could come up (like a brutal winter that uses up salt supplies and raises heat costs).

    And of course, if a recession hits, all this goes out the window, which is exactly what happened in the 2007-2009 and 2009-2011 budgets. Do you trust that we'll have unfettered growth for the next 3 1/2 years? I don't