Unemployment Rate Drops To 9.4%, But Job Growth Still Anemic
The Obama Administration is likely to focus on the fact that the unemployment rate in December dropped 4/10ths of a percentage point but, as always, the devil is in the details:
The United States economy ended the year by adding 103,000 jobs in December, the Labor Department said Friday, a number that missed expectations. In addition, the unemployment rate fell to 9.4 percent last month from 9.8 percent.
The agency also revised estimates from the two earlier months, now saying that 210,000 jobs were created in October instead of 172,000, and 71,000 in November, instead of 39,000.
As with previous months, all of the gain in December — 113,000 jobs — came from private companies.
Federal, state and local governments continued to shed jobs — cutting another 10,000 last month after trimming 8,000 in November, revised from 11,000 mostly on the local level. States and municipalities dealing with tighter budgets may be faced with further cuts as they try to shrink their deficits.
While the overall picture showed improving job growth, the additions in the private sector in December were not enough to significantly reduce the ranks of the unemployed or keep pace with people entering the work force. The outlook remains bleak for many workers. More than 14.5 million people were out of work in December.
Still, economists noted that the jobs data is a lagging indicator and pointed to other signs of a turnaround, though their outlook for 2011 remained varied.
“The U.S. economy finally appears to be picking up steam and headed toward recovery,” said Steven Blitz, a senior economist for ITG Investment Research. “Several economic indicators — including manufacturing and services output, and sales of cars and consumer goods — have shown noticeable improvement over the last few months.”
It’s impossible to say we’re even anywhere close to recovery in the jobs market until the number of new jobs created, net of jobs eliminated, is at the 150,000 per month level and above. And that rate is going to have to be sustained for many, many, many months before the long impact of the Great Recession is really behind us.
So, yea, this is good news, but let’s not fool ourselves here. The jury is still out when it comes to jobs.
Update: Over at his own place, Dave Schuler is puzzled about the new jobs numbers:
Riddle me this. How can the U-3 unemployment rate fall sharply, the U-6 unemployment rate fall sharply, the number of long-term unemployed remain essentially the same and the economy only create 100K jobs? Inquiring minds want to know.
Indeed, and this was one of the first questions that went through my mind when I saw the figures this morning. It’s actually the second month in a row that we’ve had an odd jobs report. Back in December, the November jobs report initially came in with only 39,000 jobs created. That number was revised today to a net job creation of 71,000, nearly double the amount first reported. It leads one to wonder if there isn’t something odd going on at the Bureau of Labor Statistics.