January’s U.S. Jobs Increase the Same as Monthly Average Since Trough

02/01/2013 by Alex Carrick


U.S. total employment in January 2013 was +157,000 according to the latest Employment Situation report from the Bureau of Labor Statistics (BLS).

January’s level of net new positions, derived from a survey of establishments (i.e., employers), was about what most analysts had been expecting. It was down from December’s month-over-month change of +196,000 and November’s +247,000. Prior to November and dating back to March, the month-to-month changes were between +90,000 and +165,000.

There are a couple of other estimates of U.S. employment gains each month. The household survey from the BLS, on which the unemployment rate is based, yielded an increase in net new positions of only 17,000.

At the other extreme, according to ADP’s National Employment Report, the number of private sector jobs in the U.S. increased by 192,000 in January. That was after an increase of 185,000 in December.

Automatic Data Processing Inc. (ADP) based in Roseland, New Jersey, bills itself as a leading provider of human capital management services. Its employment report is produced in collaboration with Moody’s Analytics.  

The “official” unemployment rate calculated by the BLS increased slightly to 7.9% in January from 7.8% the month before. The overall improvement in employment prospects is bringing more adults back into the work force.

The relatively strong employment increase in January was to be expected given that the level of initial jobless claims has been so modest of late. The latest four-week moving average (as of January 26, 2013) was only 352,000.

Most of the increase in U.S. total employment in January originated in the private services sector (+130,000), with retail trade (+33,000) as the standout sub-category. Private and business services (+25,000), education and health (also +25,000) and leisure and hospitality (+23,000) were other sources of strength.

Private services account for 70% of all jobs in the U.S. Add in the public sector and the proportion rises to 86% of total employment.

The public sector has been focusing on belt-tightening over the past year or two. “Government” downsized by another 9,000 jobs in January. It’s the only major sub-sector in which total employment year over year has declined (-74,000).

How did our industry do in January? Construction had a good month. The total number of on-site jobs rose by 28,000. Specialty trade contractors (+26,000) provided almost all of the increase.

On a year-over-year basis, the number of construction jobs has risen by 102,000. Half of that gain (+51,000) has originated with residential specialty contractors.

Jobs in the residential sector will continue to climb in the months ahead as a result of the solid improvement in housing starts that is underway. New home groundbreakings in December were 952,000 units seasonally adjusted and annualized, +37% versus December of the year before.

New home starts at this time are weighted more heavily towards the multi-unit market, which requires some workers with different skill sets than in single-family construction. 

Manufacturing employment (+4,000) in January was basically flat. On a year-over-year basis, its numerical increase (+109,000) was just about the same as for construction (+102,000).

Total employment in the U.S. in January 2013 versus the first month of last year was ahead by slightly more than 2.0 million.

Demonstrating that time does fly, it has been 35 months or nearly three years since the recessionary trough for U.S. total employment in February 2010.

Since then, there have been 5.5 million net new jobs created. That’s an average monthly increase of 157,000 – which, remarkably enough, is exactly the same figure as occurred in January 2013.  

A lingering problem for the economy, however, is the fact that 8.7 million jobs were lost in a very short time frame (25 months) between January 2008 and the second month of 2010.

In an encouraging note, private services employment has done more than its fair share. It experienced a 4.6 million decline in employment from peak to trough once the recession took hold.  But in the last three years, the number of private service sector jobs has risen by 5.3 million, a significantly greater amount.

During the 20 years prior to the most recent recession, U.S. “real” (i.e., inflation-adjusted) gross domestic product (GDP) increased at an average annual rate of about +3.0%. The accompanying year-over-year gain in total employment was often on the order of +2.5%.

The current expectation for economic growth is now closer to +2.0% and U.S. total employment in January was +1.5% year over year. The high jobless rate of 7.9% will gradually improve, but only after a long and frustrating struggle.

U.S.: month-to-month total job creation
U.S.: month-to-month total job creation
Over the past 20 years, the U.S. economy has generated, on average, 100,000 new jobs per month or 1.2 million new jobs per year.
Source: Payroll Survey, U.S. Bureau of Labor Statistics (Department of Labor)./Chart: Reed Construction Data - CanaData.

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