The January jobs report released today is schizophrenic in that the household survey is telling a fabulous story but the payroll survey is not as happy. The household survey shows that the unemployment rate fell again to 9.0, because of a massive 589,000-job spike in employment. In two months, the unemployment rate has gone from 9.8 percent to 9.0 percent — clearly the economy is booming with robust job growth and many job opportunities.
The payroll survey is more pessimistic about job growth, telling the same old story of a labor-market recovery that is plagued by some stutter steps. The payroll survey reports that only 36,000 jobs were created in January, although revisions to the previous two months’ numbers increased job creation in November and December by 40,000. While manufacturing (49,000) has been booming and retail trade (27,500) is growing, other industries have been lagging, especially construction (-32,000) and financial services (-10,000). Surprisingly, the number of hours worked declined and temporary help services also reduced employment for only the second time since the summer of 2009. (The payroll survey’s lackluster numbers are probably attributable in part to the weather, which would have severely affected certain industries.)
The payroll survey is considered a better monthly indicator, since it is more precise than the household survey, and it is doubtful that the gain of almost 600,000 jobs shown in the household survey will hold up in the coming months. However, the overall trend of the household survey is usually correct. The labor market is recovering — just not quite as fast as the household survey says.
This month also marked the yearly revisions to the labor-force estimates (the Bureau of Labor Statistics benchmarks its models against new data like the Census and, as a result, the size of the labor force can increase or decline). Revisions to the payroll survey report that last year’s job growth was less than was originally announced, especially in the first part of the year. With the new revisions, job growth in 2010 declined from 1.1 million jobs to 940,000, a decline of over ten percent. Revisions to the household survey indicated that overall the population of the United States and the labor force were smaller than first reported, and there was no change in the unemployment rate.
Overall, today’s report is positive, although much less positive than the unemployment rate will indicate. It will be interesting to see if the payroll survey takes a large step forward to provide more support for the optimistic picture painted by the household survey.
— Rea Hederman is assistant director of the Center for Data Analysis at the Heritage Foundation.