New BLS Numbers Make for Disappointing Outlook

Posted on January 7, 2011

non-farm payrolls employment reportAfter Wednesday’s ADP estimate of a 297k gain in private sector jobs in the month of December, there were many raised estimates of what the BLS figure would be.  In December there were 297k more people employed than at the start of the month, but there were only 103k net new jobs created.

The decline in the unemployment rate to 9.4% was primarily due to a decline of 556k in the number of people unemployed. This unemployment decline is due to an increase in the number of employed (297k) and 260K people either exiting the labor force or deciding to not enter it as our working age population also grew by 174k during the month.

Those who follow me here on seeking alpha and read my blog know that I have real long-term concerns about the declining employment-to-working age population ratio.  This month it was essentially unchanged at 58.27%. The average hourly workweek remained at 34.3 hours during the month.

Employment to population ratio and labor force growth

Source: Bureau of Labor Statistics / The Mays Report


Select Industries
Industry Net Job Change
Leisure and Hospitality +47,000
Health Care +36,000
Temporary Help +16,000
Retail Trade +12,000
Mining +5,000
Manufacturing +10,000
Construction -16,000

 This report represents another mediocre month in the labor market. Net job creation did not keep pace with growth of the working age population which implies a continued decline in the employment to population ratio going forward. More people may have abandoned their search than found new employment. Hopefully the future hiring that we keep hearing and reading about will become reality soon. Right now these predictions just continue to disappoint.

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