While the number of jobs lost was relatively greater than expected, the overall unemployment rate came down to under 10%. There are other positives in today’s report as well, particularly with respect to revisions, temporary hirings and length of work week.
The Labor Department reported today that the U.S. economy shed 20,000 jobs last month, weaker than the expected 5,000 gain for the month. Importantly, the unemployment rate fell to 9.7% from 10% last month. The expectation was for the unemployment rate to inch up to 10.1%.
Signs leading up to today’s report were mixed, at best. The fourth-quarter GDP read was a major positive. I will chalk up the ADP report early this week to the positive column as well. Incidently, the ADP appears to have been not that off the mark, after all. On the negative side, we had yesterday’s initial claims report remaining in its three-week uptrend.
On the revisions front, the picture was relatively mixed. The December number was negatively revised: originally we had 85,000 jobs lost in December, which has now been increased to losses of 150,000. But the November number had a positive revision. Recall that the November number was revised last month to a positive job gains of 4,000.
That was, in fact, our first positive monthly jobs number since the start of this recession in December 2007. The November jobs gain number has now been juiced up some more — the current revisions put the November gains at 64,000 jobs instead of only 4000.
Among other positive signs in this report, the average work week increased by 0.1 hours to 33.3 hours. And it continued with the trend of the last few months of continued temporary job creations.
We would typically see these trends play out in a jobs recovery. Companies tend to first increase the work hours of existing workers and hire temporary workers before getting confident enough to start hiring full-time employees. So, while the overall picture still remains quite bad, there are clear signs of improvement.Zacks Investment Research
