This week, instead of my usual economic digest, I’m going to focus on the U.S. jobs picture. After all, we’ve just received not one—not two—but three separate market-moving reports on the labor market. To help you process these results, I’ve prepared a few charts to help you see where we’re headed in terms of jobs growth, jobless claims and the unemployment rate.
On Wednesday, ADP reported that 192,000 private sector jobs were created in January and job growth was improving in all major sectors (except for manufacturing, which lost 3,000 jobs).
On Friday, the Labor Department announced that by its count, private and public employers added 157,000 jobs in January. This fell short of the 195,000 consensus estimate. Meanwhile, December payrolls were upwardly revised by 41,000 to 196,000.
While the two agencies do have slightly different numbers month-to-month, as you can see below, both reports follow the same general trend. Right now, jobs growth appears to be in recovery mode after dropping off at the beginning of 2012.
Last week, initial claims for unemployment rebounded 38,000 to a seasonally adjusted rate of 368,000. This was just a bit higher than economists expected—the consensus forecast was 365,000. At the same time, the four-week moving average remained largely unchanged at 352,000. While the plunge in jobless claims we saw earlier in the month was exciting, most expected this measure to bounce back. I’m not concerned about this. Jobless claims tend to be quite volatile in January, when some companies let go of temporary workers and other people wait until after the holidays to file claims.
And then there is the unemployment rate, which is calculated after surveying 60,000 households. This week, the Labor Department announced that the unemployment rate rose from 7.8% in December to 7.9% in January. The average workweek also held steady at 34.4 hours; economists were hoping that it would tick up to 34.5 hours.
The Big Picture
While January’s results were mixed, several months’ worth of past payroll data was revised. With the latest figures in, the average month in 2012 saw 181,000 jobs created. This is above the 2011 monthly average of 175,000 new jobs. On top of this, the average hourly wage has risen 2.1% over the past 12 months—above the 1.7% inflation rate.
So overall, the job market definitely appears to be on the road to recovery and the Fed will keep pumping money into the U.S. economy until unemployment hits its target of 6.5%.