January BLS Preface
*Special Note: ALL of the private sector job creation in January came from small and mid-sized companies—ALL OF THE JOB CREATION!! (see the ADP/Moody’s Report below)*
The new ADP/Moody’s National Employment Report
Released, January 30, 2013
Private sector employment increased by 192,000 jobs from December to January, according to the January ADP National Employment Report®, which is produced by Automatic Data Processing, Inc. (ADP®), a leading provider of human capital management solutions, in collaboration with Moody’s Analytics. The report, which is derived from ADP’s actual payroll data, measures the change in total nonfarm private employment each month on a seasonally-adjusted basis. The December 2012 report, which reported job gains of 215,000, was revised downward by 30,000 to 185,000 jobs.
By Company Size
Small businesses: 115,000
1-19 employees 58,000
20-49 employees 57,000
Medium businesses: 79,000
50-499 employees 79,000
Large businesses: -2,000
500-999 employees 7,000
1,000+ employees -9,000
Goods producing 15,000
Service providing 177,000
Financial activities 12,000
Professional/business services 40,000
Goods-producing employment rose by 15,000 jobs in January which was primarily driven by an increase in construction jobs of 15,000. Meanwhile, manufacturers shed 3,000 jobs.
Service-providing jobs increased by 177,000. Among the service industries reported in the report, professional/business services registered the largest gain with 40,000 jobs added over the month. Trade/transportation/utilities added 33,000 jobs and financial activities added 12,000 jobs.
“U.S. private sector employment got off to a good start in 2013, as 192,000 jobs were added during the month of January,” noted Carlos A. Rodriguez, president and chief executive officer of ADP. “According to the ADP National Employment Report, private sector employers created an average of 183,000 new jobs per month during the last three months. This is an encouraging sign of steady improvement in the job market.”
Mark Zandi, chief economist of Moody’s Analytics, said, “The job market is slowly, but steadily, improving. Monthly job gains appear to have accelerated from near 150,000 to closer to 175,000. Construction is finally kicking into gear and more than offsetting the weakness in manufacturing. The recent gains may be overstating any improvement, particularly in the context of recent revivals in growth at the start of the past three years, but the gains are encouraging nonetheless.”
(The February 2013 ADP National Employment Report will be released at 8:15 a.m. ET on March 6, 2013).
The January BLS Analysis
The unemployment rate is published by the Bureau of Labor Statistics, a division of the US Department of Labor. The rate is found by dividing the number of unemployed by the total civilian labor force. On February 1st, 2013, the BLS published the most recent unemployment rate for January, 2013 of 7.9% (actually it is 7.923, up .074% from 7.849%, in December, 2012).
The unemployment rate was determined by dividing the unemployed of 12,332,000—up from the month before by126,000—since January, 2012 (one year ago), this number has decreased by 416,000) by the total civilian labor force of 155,654,000 (up by 143,000 from December, 2012). Since January 2012, our total civilian labor force has increased by 1,298,000 people.
(The continuing ‘Strange BLS Math’ saga): The BLS continues to increase the total Civilian Working Population—this time up to 244,663,000; up from December by 313,000; up from November by 176,000; up from October by 191,000; up from September by 211,000, up from August by 206,000; up from July by 212,000; up from June by 199,000; up from May by 189,000; up from April by 182,000; up from March by 180,000; up from February by 169,000; up from January by 335,000; and up from last December by 2,020,000. And this month they have slightly increased the Civilian Labor Force to 155,654,000 (up from December by 143,000).
Subtract the second number from the first number and you get 89,009,000 (not 89,008,000, by the way) ‘Not in Labor Force’. That is an increase of 170,000 “Not in Labor Force” in one month’s time. Since January 2012, 1,096,000 US workers have vanished! Where did those 1,096,000 potential workers disappear to? I am assuming they still have to eat and pay their rent. They still need money, don’t they?
Our Employment Participation Rate—the population 16 years and older working or seeking work—remains at 63.6% (.1% higher than August’s historic low level of 63.5%). One year ago, our Participation Rate in January was 63.7%.
Final take on these numbers: Fewer people looking for work will always bring down the unemployment rate.
Anyway, back to the point I am trying to make. On the surface, these new unemployment rates are scary, but let’s look a little deeper and consider some other numbers.
The unemployment rate includes all types of workers—construction workers, government workers, etc. We recruiters, on the other hand, mainly place management, professional and related types of workers. That unemployment rate in January was 3.9% (this rate is the same as last month’s 3.9%). Or, you can look at it another way. We usually place people who have college degrees. That unemployment rate in January fell to 3.7% (down from last month’s 3.9%).
Now stay with me a little longer. This gets better. It’s important to understand (and none of the pundits mention this) that the unemployment rate, for many reasons, will never be 0%, no matter how good the economy is. Without boring you any more than I have already, let me add here that Milton Friedman (the renowned Nobel Prize-winning economist), is famous for the theory of the “natural rate of unemployment” (or the term he preferred, NAIRU, which is the acronym for Non-Accelerating Inflation Rate of Unemployment). Basically, this theory states that full employment presupposes an ‘unavoidable and acceptable’ unemployment rate of somewhere between 4-6% with it. Economists often settle on 5%, although the “New Normal Unemployment Rate” has been suggested to fall at 6.7%.
Nevertheless (if you will allow me to apply a ‘macro’ concept to a ‘micro’ issue), if this rate is applied to our main category of Management, Professional and Related types of potential recruits, and/or our other main category of College-Degreed potential recruits, we find no unemployment! None! Zilch!
To read the full report click here: http://www.themarshallplan.