The Labor Department’s Employment Situation release for January provides more evidence of a recovering job market. According to the report, employers increased payrolls by 157,000 in January. December payroll figures were revised to 196,000 new jobs after an initial report of 155,000 and November 247, 000. The Bloomberg survey of 90 economists produced estimates in the range of 115,000 to 230,000 with a median figure of 165,000 new jobs for January.
The report was tempered by the news that more households reported in the survey that they did not have a job. The unemployment rate rose from 7.8 percent to 7.9 percent.
Construction, retail trade, health care, and wholesale trade created most of the jobs over the past month. The recovery of the housing market has fueled hiring by construction companies. These firms added 28,000 new jobs and almost 100,000 new hires over the past four months.
Retailers added 33,000 jobs in January compared to an average of 20,000 new positions a month last year. The following industries showed little change from December: financial activities, professional and businesses services, leisure and hospitality, and government.
Since September 2012, the unemployment rate has hovered at or near 7.9 percent. The number of unemployed Americans remained mostly unchanged from December with 12.3 million individuals looking for work.
Here is a breakdown of unemployment by group:
- Adult men – 7.3%
- Adult women – 7.3%
- Teenagers – 23.4%
- Whites – 7.0%
- Blacks – 13.8%
- Hispanics – 9.7%
- Asians – 6.5%
The agency also states that the job market performed better than expected and held together despite sluggish economic growth. The chief U.S. economist at UniCredit Group (New York) Harm Bandholz emphasizes the “resiliency” of the U.S. labor market. “The big story is all the upward revisions to the previous months, which gives the report a real positive spin. All these concerns that the fiscal uncertainty deterred businesses from hiring, they certainly haven’t materialize,” said Bandholz.
Counteract Tax Increase
Overall, a stronger jobs report provides somewhat of a cushion to offset lawmakers’ elimination of the two-year payroll tax reduction. For households, the higher taxes mean consumers will have less take-home pay. An individual making $50,000 will lose about $1,000. Many analysts predict that consumer spending, which contributes 70 percent to the domestic economy, will decrease as a result of the “tax increase.” The economy will grow about a half-point less this year.
For the first time in 3 1/2 years, the economy contracted during the fourth quarter 2012. Analysts attribute the contraction to cuts in defense spending and fewer exports. Most economists believe the decline in growth is temporary and expect the economy to rebound Q1 2013. They predict about a 1 percent annual rate this quarter and 2 percent for the year.
Other Labor Department News
The Labor Department also issued its annual benchmark update. This report makes adjustments to employment statistics, in this case from April 2011 to March 2012, and reconciles data with corporate tax records. The realignment of the numbers shows that on an unadjusted basis, payrolls grew by additional 424,000 jobs compared to the numbers originally reported. The agency says that of the 8.74 million jobs lost since the last recession, which ended in June 2009, 5.51 million jobs have been regained.
The January Employment Situation data use the new Census Bureau population estimates to calculate the unemployment rate. The adjusted data increases the estimated workforce sized by 136,000. The Labor Department also changed the way it makes seasonal adjustments for payroll data.