It is impossible to understand today’s jobs report without factoring in the weather. Typically in January, bad weather reduces jobs by 417,000. However, this January bad weather prevented 886,000 people from working, a difference of 469,000. In other words, if the weather had been “normal” this January, payrolls would have exploded to the upside and hours worked would have continued to move up rather than slipped back.
Despite the weather, civilian employment, an alternative measure of jobs that is better at picking up the self-employed and small start-up businesses, increased by 589,000 in January. Assuming a return to more normal weather in either February or March, payroll gains should be huge in the months ahead.
The increase in civilian employment was part of the reason the jobless rate dropped steeply again in January, to 9.0 percent from 9.4 percent in December. What is particularly good about the drop is that it was all due to full-time workers, showing that employers are getting more confident.
But the confidence is not confined to employers only; it’s being felt by workers, too. The share of voluntary job leavers among the unemployed (people who left their job on their own and are looking for a new position) has perked back up to 6.4 percent after bottoming at 5.5 percent only four months ago. Even more notably, new entrants to the labor market — people looking for a job who haven’t had one before — now make up 9.6 percent of the unemployed, the highest share since 2006. Given better economic news on both manufacturing and service output, the underlying trend in job growth will accelerate in the months ahead.
— Bob Stein is senior economist with First Trust Advisors.