Is Today's Employment Report a "Game Changer?"

February 3, 2012

By: Jim Wiesemeyer, Pro Farmer Washington Consultant

Today's Employment report from the Labor Department has economic and potential political ramifications, with some noting the report is a "game changer" while others aren't that confident.

First, the numbers: January nonfarm payrolls advanced 243,000 with continued strong private-sector job growth as government jobs declined again by 14,000 -- primarily in state and local governments.

Unemployment rate: Generated by a separate survey, the unemployment rate fell to 8.3%, down 0.2% from December's 8.5%. It's the lowest unemployment percentage since Feb. 2009. The number of unemployed persons declined to 12.8 million in January.

After accounting for the annual adjustments to the population controls, the employment-population ratio (58.5%) rose in January, while the civilian labor force participation rate held at 63.7%.

Workweek: The average workweek for all employees on private nonfarm payrolls was unchanged in January. The manufacturing workweek increased by 0.3 hour to 40.9 hours, and factory overtime increased by 0.1 hour to 3.4 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls edged up by 0.1 hour to 33.8 hours.

Even though some point out the Labor Dept. noted things were unchanged vs. December in terms of the workweek, it is still an increase. As one observer noted, a one-tenth increase in average weekly hours worked is equal to an additional 384,000 jobs at the current average, and 330,000 jobs using a "full-time" 40-hour workweek.

Hourly earnings: In January, average hourly earnings for all employees on private nonfarm payrolls rose by 4 cents, or 0.2%, to $23.29. Over the past 12 months, average hourly earnings have increased by 1.9%.

Revisions: The change in total nonfarm payroll employment for November was revised from +100,000 to +157,000, and the change for December was revised from +200,000 to +203,000. Monthly revisions result from additional sample reports and the monthly recalculation of seasonal factors. The annual benchmark process also contributed to these revisions.

Adjustments to the household survey: Effective with data for January 2012, updated population estimates which reflect the results of Census 2010 have been used in the household survey. Population estimates for the household survey are developed by the U.S. Census Bureau. Each year, the Census Bureau updates the estimates to reflect new information and assumptions about the growth of the population during the decade. The change in population reflected in the new estimates results from the introduction of the Census 2010 count as the new population base, adjustments for net international migration, updated vital statistics and other information, and some methodological changes in the estimation process. The vast majority of the population change, however, is due to the change in base population from Census 2000 to Census 2010.

The impacts: This is a "game changer" according to Allen Sinai, Chief Global Economist with Decision Economics, Inc. He reasons the data is that significant as it signals the "picture of the labor market this month and last… is of a turn up in the labor market from a very depressed state."