Tag Archives: Employment

Jobs reports: US versus Canada

As mentioned in the previous post, the United States economy created fewer jobs than expected, but the unemployment rate unexpectedly declined. In Canada, the exact opposite occurred:

Canada’s job creation in January was more than four times the median forecast, pushing the Canadian dollar to its strongest level since May 2008 and adding to evidence the country’s economic recovery may be accelerating.

Employment rose by 69,200 and the labor force increased by 106,400, Statistics Canada said today in Ottawa. The jobless rate rose to 7.8 percent from December’s 7.6 percent, as more people sought work. Economists forecast 7.6 percent unemployment and job growth of 15,000, according to the median estimates of 25 and 26 economists surveyed by Bloomberg News.

So which would you rather have?

  • US: Unemployment rate declines but few jobs are created.
  • Canada: Many jobs were created but unemployment rate rose.

Let me know what you think in the comments.

Jobs report not as good as the unemployment rate implies

Being the lazy person that I am and not wanting to reinvent the wheel, I decided to wait until some other blogger analyzed the latest employment report data. The people at No Money No Worries explains how today’s report showed a small increase in jobs but a large decline in the unemployment rate:

Today’s unemployment headline proclaims that the “Unemployment Rate Falls to 9.0%.” However, the number of nonfarm jobs increased very little (+36,000).

So, unless we’ve all changed careers to become farmers, something doesn’t add up.

All else being equal – with roughly 153 million in the US labor force – a 0.1% drop in the unemployment rate would require the creation of 153,000 jobs. A decline of 0.4% would require payroll employment to increase by 4x that amount, or 612,000 jobs.

So, one suspects that the headline unemployment rate fell because these workers dropped out of the labor force entirely – and BLS data confirms that is indeed what happened.

According to the BLS, the civilian labor force in Dec 10 was 153,690,000.  January 2011′s dropped to 153,186,000 – a difference of 504,000 workers.

So, to sum it up, the 0.4% drop in unemployment was due to:

1.   36,000 new jobs; and

2. 504,000 workers dropping out of the labor force.

Not exactly a stellar report.

I think that sums it up well. If you enjoy economics and statistics (and some cool charts), I highly recommend No Money No Worries.

Legal Insurrection: Key Numbers In Unemployment Report Not So Good

Le·gal In·sur·rec·tion analyzes today’s employment report and the results are not good despite the headline decline in unemployment from 9.8% to 9.4%. (Reposted with permission. Original post here.)

Needless to say, administration supporters will be touting that the unemployment rate released by the Bureau of Labor Statistics this morning dropped from 9.8% to 9.4%.  Politically, this is good news for Obama, at least in the short run.

Dig just a bit deeper, and you will see that 0.2% of that drop (or half the total drop) was from a decrease in the “participation rate” from 64.5 to 64.3 of the population.  So half of the good news reflects that people have dropped out of the work force and have given up looking for work.

To put this in context, I ran a chart from the BLS website historical statistics database, showing the participation rate over the past 20 years, which shows that we are at a 20-year low:

The other disheartening statistic is reflected in the chart combining the unemployment, marginal and discouraged workers (in short, everyone who is not working but currently or at one time wanted to work, or who is employed part time because full time work was unavailable).  Combine all those and the total is 16.6% up from 16.3% November not seasonally adjusted (seasonally adjusted it is 16.7% down from 17%).  This is the highest number since 1994 (first year data available):

Here are two other charts showing the depth of the problem.  The first shows the average length of unemployment (in weeks) and the second the median length of unemployment:

While the drop in the unemployment rate from 9.8% to 9.4% is good political news, it’s hard to see any real improvement below the surface.

This gives further evidence that the American economy is still in decline. All that government stimulus accomplished nothing except for putting us further in debt.

Britain to fire 500,000 public sector employees. But not really.

As mentioned earlier, Britain is finally taking action to stave off a credit crisis and possible bankruptcy. Some are reporting that Britain will be firing 500,000 public sector employees.

For example, The Week reports:

David Cameron is laying off 500,000 government employees.

However, that will not be the case. As the Mail reports:

500,000 public sector jobs to go

1 in 10 public sector jobs to go as government gambles on private recovery

According to the story, this 10% reduction will take 4 or 5 years:

But they make clear that the Government has adopted the Office for Budget Responsibility’s forecast that 490,000 jobs in the public sector will go by 2014/15.

If the average public sector employee works for 40 years, 10 percent of them would retire within 4 years. In other words, the government will likely lay off very few people. Instead, the British government simply will not fill vacant positions.

This is great news, on the one hand, because the British are working to solve their financial problems and this job reduction it is quite easily achievable because it does not actually require firing many people. However, let us not be under the misapprehension that the British government is making a tough choice here. Do not believe the talk that half a million will be laid off. That is simply untrue.

No sovereign debt crisis here in the U.S., but we’ve got other problems, namely jobs.

The United States may not be experiencing a sovereign debt crisis like Europe, which I have written about quite often recently, but we have our own problems. In Europe, 20 percent unemployment is making it very difficult to balance budgets. While unemployment is not as bad here, we are experiencing the worst economic recovery since the Great Depression. And today’s ADP report proves it:

Private employers unexpectedly cut 39,000 jobs in September after an upwardly revised gain of 10,000 in August, a report by a payrolls processor showed on Wednesday.

The August figure was originally reported as a loss of 10,000.

The median of estimates from 38 economists surveyed by Reuters for the ADP Employer Services report, jointly developed with Macroeconomic Advisers LLC, was for a rise of 24,000 private-sector jobs in September.

Employment fell 63,000 short of expectations, though last month was revised up by 20,000. ADP only measures private employment. The government report due out Friday also includes public sector jobs, which is expected to decline as census workers were recently laid off after the census was completed.

The ADP figures come ahead of the government’s much more comprehensive labor market report on Friday, which includes both public and private sector employment.

That report is expected to show overall nonfarm payrolls were unchanged in September, based on a Reuters poll of analysts, but a rise in private payrolls of 75,000.

Woh! These economists expect 75,000 private sector jobs were created last month when ADP said 39,000 were lost? Seems like somebody is way off the mark here.

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