December unemployment rate declines (6.7%); payroll employment edges up (+74,000)

[mahatmakanejeeves]

Last edited Mon Jan 13, 2014, 10:28 AM - Edit history (5)

Source: U.S. Bureau of Labor Statistics

The unemployment rate declined from 7.0 percent to 6.7 percent in
December, while total nonfarm payroll employment edged up (+74,000),
the U.S. Bureau of Labor Statistics reported today. Employment rose
in retail trade and wholesale trade but was down in information.


-----------------------------------------------------------------------------
| Revision of Seasonally Adjusted Household Survey Data
|
| Seasonally adjusted household survey data have been revised using updated
| seasonal adjustment factors, a procedure done at the end of each calendar
| year. Seasonally adjusted estimates back to January 2009 were subject to
| revision. The unemployment rates for January 2013 through November 2013
| (as originally published and as revised) appear in table A, along with
| with additional information about the revisions.
------------------------------------------------------------------------------

Household Survey Data

The number of unemployed persons declined by 490,000 to 10.4 million
in December, and the unemployment rate declined by 0.3 percentage point
to 6.7 percent. Over the year, the number of unemployed persons and the
unemployment rate were down by 1.9 million and 1.2 percentage points,
respectively. (See table A-1.)

Among the major worker groups, the unemployment rates for adult men (6.3
percent) and whites (5.9 percent) declined in December. The rates for adult
women (6.0 percent), teenagers (20.2 percent), blacks (11.9 percent), and
Hispanics (8.3 percent) showed little change. The jobless rate for Asians
was 4.1 percent (not seasonally adjusted), down by 2.5 percentage points
over the year. (See tables A-1, A-2, and A-3.)
....

The civilian labor force participation rate declined by 0.2 percentage
point to 62.8 percent in December, offsetting a change of the same
magnitude in November. In December, the employment-population ratio was
unchanged at 58.6 percent. The labor force participation rate declined by
0.8 percentage point over the year, while the employment-population ratio
was unchanged. (See table A-1.)

Read more: http://www.bls.gov/news.release/empsit.nr0.htm

---

Good morning, Freepers and DUers alike. I especially welcome our friends from across the aisle. You're paying for this information too, so you ought to see this as much as anyone. Please, everyone, put aside your differences long enough to digest the information. After that, you can engage in your usual donnybrook.

If you don't have the time to study the report thoroughly, here is the news in a nutshell:

Commissioner's Statement on The Employment Situation
http://www.bls.gov/news.release/jec.nr0.htm

Oooof. This is way below the expected number. On the Nightly Business Report last night, people were estimating that 200,000 to 235,000 jobs were created in December. To see how far out of whack this number is, please recall that, two days ago, Automatic Data Processing (ADP®) estimated that 238,000 jobs had been added in December.

U.S. Economy Added 238,000 Private-Sector Jobs in December, According to ADP® National Employment Report
http://www.democraticunderground.com/1014691789

Live From New York! It’s Jobs Friday!
http://blogs.wsj.com/moneybeat/2014/01/10/live-from-new-york-its-jobs-friday-8/


- National Archives

Yes, it’s that time again, folks. The time when for one ever-so-brief moment the interests of Wall Street, Washington and Main Street are all aligned on one thing: Jobs.

The Labor Department said U.S. payrolls rose by 74,000 last month and the unemployment rate fell to 6.7% from 7%. Expectations were for 200,000 new jobs to be created with the unemployment rate sticking at 7.0%.

Here at MoneyBeat HQ, we’ll be offering color commentary and tracking the markets’ reactions. Feel free to weigh-in yourself, via the comments section. And while you’re here, why don’t you sign up to follow us on Twitter.

Enjoy the show.

Some comments:

-- -- --

8:35 am
Lowest Monthly Gain in Three Years
by Steven Russolillo

Only 74,000 job gains is the lowest monthly increase in three years. Yikes.

-- -- -- --

8:34 am
What a Mess!
by Michael J.Casey

Put December 2013 as the month in which the country’s labor data officially became a mess. What are we to make of a number that came in so far below expectations after a very strong November, all at the same time that the unemployment rate dropped all the way down to 6.7%. How on earth are we supposed to read a discernible, meaningful trend in this morass of contradictions?

One thing’s certain, it’s a reminder that month-to-month data reactions are dangerous.

-- -- -- --

8:34 am
Pace of Job Gains Is Very Steady
by Steven Russolillo

December’s figures are a big disappointment, but the longterm trend remains steady. For all of 2013, the average pace of monthly gains was 182,000, down slightly from 183,000 in 2012.

-- -- -- --

8:33 am
Participation Rate Hits New Low
by Steven Russolillo

Participation rate falls to 62.8%, a new low. That explains why the unemployment rate fell so much. Unemployment rate down to 6.7% from 7.0%, but it appears to be falling for all the wrong reasons.

-- -- --

One more thing:

So how many jobs must be created every month to have an effect on the unemployment rate? There's an app for that.

http://www.frbatlanta.org/chcs/calculator/index.cfm
Federal Reserve Bank of Atlanta Jobs Calculator™

Well, enough of that. On with the show.

Monthly Employment Reports

The large print giveth, and the fine print taketh away.

A DU'er pointed out several months ago that, if I'm going to post the link to the press release, I should include the link to all the tables that provide additional ways of examining the data. Specifically, I should post a link to
Table A-15. Alternative measures of labor underutilization. Table A-15 includes those who are not considered unemployed, on the grounds that they have become discouraged about the prospects of finding a job and have given up looking.

Employment Situation

From the February 10, 2011, DOL Newsletter:

Take Three

Secretary Solis answers three questions about how the Bureau of Labor Statistics calculates unemployment rates.

How does BLS determine the unemployment rate and the number of jobs that were added each month?

BLS uses two different surveys to get these numbers. The household survey, or Current Population Survey (CPS), involves asking people, from about 60,000 households, a series of questions to assess each person in the household's activities including work and searching for work. Their responses give us the unemployment rate. The establishment survey, or Current Employment Statistics (CES), surveys 140,000 employers about how many people they have on their payrolls. These results determine the number of jobs being added or lost.

[JoePhilly]

1. This is terrible news!!!

Well, probably not.

But I am anticipating that some one will be along shortly to explain WHY this is in fact, terrible news.

[last1standing]

8. Good news is good news.

I'm not usually called out for being an Obama worshipper but I give him credit when he deserves it. This is one of those times.

[NickB79]

48. NPR said this morning they expected 200,000 new jobs

That was before the report was released.

That is a huge miss, and not a good number at all.

[Morganfleeman]

9. It's not a great number

A miss >50% below expectation is not good on the nonfarm payrolls number. If it were good, the dollar would have strengthened, but it's down half a percent in trading today. The ten year yield is down over 3%, which is also not an indication that this is positive. The question is, was this drop really due to cold weather? If so, then we should see an uptick next month to account for job losses in December in arears like construction.

As far as the unemployment rate itself, yes it's an improvement, but why did it improve? Because people stopped looking for work and the labor participation rate fell. That's not a reason to be overly bullish. We will have to wait till next month to get a better indication of where things are heading this year.

Some early signs are not great, such as the volume of shipping taking a nosedive since the start of the year. Housing is still the positive factor, but query whether rising rates will slow house price appreciation.

[Beacool]

13. Bingo!!

"As far as the unemployment rate itself, yes it's an improvement, but why did it improve? Because people stopped looking for work and the labor participation rate fell. That's not a reason to be overly bullish. We will have to wait till next month to get a better indication of where things are heading this year."

And that's the main reason why the unemployment rate has progressively gone down.

[LionsTigersRedWings]

25. Not the greatest way to get that number down!

Idk how this helps!

[Beacool]

41. I think that all these govt. figures are designed to yank our chain.

They all do it, regardless of party. The reality on the street is that it's still hard to find middle class jobs. I don't mean part time jobs flipping burgers or serving coffee at Starbucks. I mean corporate jobs that pay equivalent wages and offer similar benefits as to those that were available before the economy went down the rabbit hole.

I'll give you an example. I work for a Fortune 100, a multinational that it's the largest in the world in its field (I rather not say which one). They have been steadily laying off people the last three years. Most of those jobs have either been sent to cheaper areas of the country or overseas. I recently spoke to a good friend (she's the one who got me into the company some years ago). She's much older than me and, when her entire department was let go in 2012, she chose to take an early retirement. She keeps in touch with most of her coworkers. In the year and and 8 moths since they were let go, not ONE person has found a similar job. They either have found part time work with crappy pay and few or no benefits, or haven't found any job at all.

This is just one of many stories I've heard from friends, people in town and members of my church. The job market is beyond tough, despite being in the the NY metro area.

So to all these figures I say, Bullshit!!!!!!

[JoePhilly]

16. Here's the thing ... UE is down from a high of 10.2% in 2009, to 6.7% now.

Every time it goes down ... and I mean every single time, folks rush to DU to describe why the latest drop is actually terrible news.

"Everyone stopped looking."

"The job gains were seasonal."

"They government is lying."

"The jobs are all at McDonalds."

"We should be using a different UE calculation."

So on.

And what the "complain first chorus" ignores every time, are the trend lines.

So whenever I see this particular OP with the new monthly numbers ... I know that it won't take more than a couple posts before the "reasons this seeming good news is actually bad news" posts, will start to arrive.

[Morganfleeman]

17. There are mutiple variables that influence the unemployment rate

Obviously. Job creation is one, and we have had job creation as evinced by the jobs numbers That is an important factor. Labor participation is another important factor. Some of the labor participation drop is due to a number of reasons, early retirements and scheduled retirements, demographic shifts and increased numbers on long term disability and people ceasing to look for work etc. These can have a material impact on the NFP figure.

Of course it's a good thing that we've had job creation and that numbers have improved, but the numbers all have a story behind them, and the bottom line is you have to dig into all these numbers. Whether it's the non-farm payrolls, GDP, trade deficit, whatever the case may be. Most people have such a short attention span that they read a headline number, recount it as fact but have no clue what's behind the numbers.

[JoePhilly]

20. I'd tend to agree, partiularly with your last sentence.

The reality is that the economic situation can not be reduced to any one number. Its just too complicated.

In addition, sticking to UE ... this latest drop doesn't just describe a set of things that happened ... it also has an after effect.

As UE drops, businesses and economists see that as a positive sign of a recovering economy. Businesses are more likely to invest and to hire more people if they think the economy is improving ... they want to catch that wave, not watch it go past.

So this drop, whatever the details, helps create an incentive for businesses to hire down the road. It may also pull people back into the job market.

Similarly, when UE jumps up, businesses see it as a sign of a slowing or declining economy, and they slow hiring, or even start to reduce their work force in anticipation.

So I think overall, any drop in UE is positive news. Especially if it becomes part of an overall downward trend.

[JaneyVee]

34. Many economists are pointing to massive baby boomer retirement as

To why the participation rate as ticked down. Surprisingly, there is no metric economists use to discern retirement from those who stopped looking, which I believe is BS because no unemployed person stops looking for work.

[Igel]

59. Nice hypothesis.

But a hypothesis has to account for all the relevant data.

So it accounts for a 0.2% drop in the labor participation rate. Presumably a lot of people during that reporting period. I know a lot of people who plan to retire mid-work-year, just because it's cleaner to retire at the end of the fiscal year.

How does massive baby-boomer retirement account for a 0.2% uptick in November?


Keep in mind that uptick was actually a smidgeon smaller than the drop, in terms of absolute numbers.

I mean, I can think of a patch that doesn't help in the least.

Let's just say massive numbers of people returned to the labor force in November, enough to counter even more massive boomer retirement. Which poses the question, "Why the jerk in baby boomer retirement in November?" And again, the hypothesis fails looking at sufficiently fine-grained data.

The only real possible "fix" is to look at longer term trends. In which case this is a bad report that may be rendered unimportant when averaged in with 4-5 (or more) months.

[MannyGoldstein]

18. How would these charts look for the top 1% instead of median?

http://advisorperspectives.com/dshort/updates/Median-Household-Income-Update.php

[JoePhilly]

21. Thanks for proving my point so quickly.

I believe that is the "We should be using a different measurement" approach to disparaging good news.

Well done.

[former9thward]

23. The Labor Department said 350,000 people gave up looking for work.

But yeah that is really great news.

[JoePhilly]

24. 10.2% down to 6.7%

Good or bad?

[former9thward]

26. Math is not your friend.

Most of that drop has been due to people giving up looking for work so the labor force number goes down. The labor force number is the denominator in the unemployment calculation. The lower the denominator the lower the unemployment rate number.

[MannyGoldstein]

29. If every American would just stop looking for work

we'd have an 0% unemployment.

Clearly, all job seekers have ODS and are trying to hurt the President.

[n2doc]

31. Lowest % participating in the workforce since the 1970's

http://www.theguardian.com/business/2014/jan/10/us-economy-adds-74000-jobs-december

Only 62.8% of the adult workforce participated in the jobs market in December, down 0.2 percentage points from the previous month. It was the lowest participation rate – the number of people employed or actively looking for work – since the 1970s.


So we are getting there, Manny. TPP should help!

[MannyGoldstein]

37. Why do Liberals refuse to recognize that the non-hopeless unemployed are the *real* problem? nt

[adirondacker]

44. The bigger the cuts in individual SNAP benefits, the more people they can feed on the same budget!

The government is all about Saving! Pretty soon, none of the middle class will have to work, and we'll all be lean and mean on delicious Monsanto peas! (Purchased at Walmart of course).

[840high]

32. 8 million without jobs.

[LionsTigersRedWings]

27. improvement, but still bad.

[sweetloukillbot]

28. One thing I wonder...

Are there stats as to how many boomers are starting to draw social security and leaving the workforce because of that? I know my mom is an early boomer and she has officially hit retirement age (although she still is planning on working for another year or so). Are boomers who were unemployed giving up because they've hit the age to draw SS, and would that account for some of the shrinking workforce?

[Munificence]

51. Don't know if this helps

but since 2008 we have seen roughly a 2% increase in folks over 65 remaining in the workforce so it's difficult to say that they account for some of the shrinking workforce.

The shrinking work force from my perspective is from the 18-24 year old crowd. Almost all the ones I know in the family are living with parents or just barely scraping by.

[MannyGoldstein]

11. It *is* great news!

If you're innumerate or rich.

The "unemployment rate" dropped because more people dropped out of the workforce. The number of new jobs was way below the number needed to keep even after adjusting for demographic changes.

[JoePhilly]

22. And you proved my point yet again ... using another of the standard whines I listed.

To disparage any good news.

Again ... well done!!

[LionsTigersRedWings]

30. how is it good news that the UE rate dropped because people

are not looking for work anymore?


YAY the UE rate is at 6.7! but it means shit for those looking for jobs!

[JoePhilly]

38. How many of them are retiring Boomers?

The drop to 6.7% will be taken as another sign that the economy is improving.

Every drop in that number encourages employers to hire more people.

Every time it jumps up, employers pull back, fearing a slowing recovery. This is true even if the reason is people coming back into the labor market.

The drop from 10.2% in 2009 to 6.7% now, is positive.

The overall trend is far more important.

On DU however, if UE goes up, its bad news. If it goes down, that's also bad news.

Read the thread.

Most of the posts are reasons to ignore the trend.

Its the same with the stock market ... if it drops, its proof on DU that the economy is about to collapse ... but if it goes UP, the stock market only reflects how the 1% controls the world.

[jeff47]

52. You're a fantastic example of how the headline number does not tell the whole story.

Yes, U3 went down.

The problem is that's only one measure of employment, and it's generally a rather crappy one. But it always results in the lowest number, so it's the one that gets put in headlines.

Labor participation rate has not been this low since the 1970s. The other measures of unemployment are very high. And 6.7% is still very high for U3. And no, vast swaths of boomers are not retiring to cause those numbers. If they were, unemployment among millennials would be very low instead of very high.

This is not good news. It is also not "run around screaming we're all doomed" news, but that doesn't make it good news.

[BumRushDaShow]

2. Saw all the Breaking News banners

As always, thanks for posting the details!

[philosslayer]

3. 6.7% unemployment rate!

Thank you Mr. President!

[Botany]

4. Can you imagine where we would be if we had a Congress that worked w/the POTUS?

with a federal jobs program and an infrastructure bank the numbers would be even better.

And yes i know we still have a massive long term unemployment and under employment
problem in America.

[jschurchin]

5. Thank you for the info

I just wonder how the removal of 1.3 million Americans from long term unemployment effected the unemployment rate?

Anyway, thanks again for your information.

[progree]

47. Good Q. Unemployment rate is not based on unemployment insurance beneficiary stats, but....

[font color = blue] I just wonder how the removal of 1.3 million Americans from long term unemployment effected the unemployment rate?[/font]

If you mean the 1.3 million Americans unemployed 26 weeks or longer who lost their extended unemployment benefits at the end of last year -- here is a canned blurb from my "page" (see my signature line) about that

# Myth: "those who have exhausted their unemployment insurance benefits are not counted as unemployed. If they were counted, the official unemployment rate would be much higher" (you often hear this claim from the RepubliCONS when a Democratic president is in the White House, and vice versa when a RepubliCON is in the White House).

# Fact: the count of the unemployed and the unemployment rate is NOT a count of those receiving unemployment benefits, nor is unemployment benefit receiver status factored at all into any of the official unemployment rate statistics (U1, U2, U3, U4, U5, U6, etc.). Rather, the unemployment rate is based on a survey of 60,000 households chosen at random. See: http://www.bls.gov/cps/cps_htgm.htm (and search the page for the word "insurance&quot or Google the below line::
"How the Government Measures Unemployment" cps_htgm.htm
and search the page for the word "insurance"

---------------------------
However, over the longer term, undoubtedly a cut-off in benefits will affect the unemployment rate numbers, for example:

# People who lose benefits will be more likely to take any job out there, no matter how far below their education, training, and experience, thus lowering the unemployment rate (since they are no longer unemployed).

# Some people who were making some effort to look for work only in order to continue to receive unemployment benefits (a requirement to receive benefits) will drop the charade of looking for work when their benefits are cut off. This will also lower the unemployment rate (people who have not looked for work in the last 4 weeks are not counted as unemployed (U3) or the last 12 months (U4-U6) ). It will also lower the labor force participation rate (officially the labor force is those employed or who have looked for work in the last 4 weeks).

(People in the above category are not necessarily "cheats" in my book -- for example people who may not really be looking right now because they are completing coursework in order to earn a certificate in order to improve their chances of getting a job that utilizes their education and experience is not Reagan's "welfare queen" IMHO)

# Some other effects, anyone?

Oh - my signature line -vv I won't be updating until Saturday. Before then, they are the latest through October.

[onehandle]

6. Which will give fuel to Republicans who want to punish the middle-class, by cutting unemployment. nt

[SmittynMo]

7. 6.7%. That's impressive

Do you think Obama would get any credit for this? Hell NO. I hear nothing on MSM about this.

[MannyGoldstein]

10. As long as people don't know what the labor participation rate is, we're all set

Let's just talk about the drop in the "unemployment rate", and say that the economy's improved a lot, but we need to do more work.

[1000words]

46. Yup, the economy is in recovery ...

As long as one keeps looking at the numbers on paper, and ignore tales of woe from neighbors, friends and family.

[Spitfire of ATJ]

12. If a Republican were in charge the media would be saying over 90% of the people are working.

[Jimbo S]

14. I looked up the U-6

End of '09, the U-3 was 10.0%, the U-6 about 17%
Now, the U-3 is 6.7%, the U-6 under 14%

Either way, the rates are dropping under Obama.

[progree]

40. The numbers are seasonally adjusted nt

Oh - my signature line -vv I won't be updating until Saturday. Before then, they are the latest through October.

[democratisphere]

19. There are ridiculously low unemployment headline numbers, then there is the reality....

of actual unemployment few want to face.

If actual unemployment numbers are not used, the problem of unemployment will not be addressed and never be resolved.


?hl=ad&t=1389365936unemployment-charts


http://www.shadowstats.com/alternate_data/unemployment-charts

[Shoulders of Giants]

33. I wouldn't call this good news.

Most of the drop come people leaving the work force. That may be good news for me. I currently have a temp job that ends in May, and am I already looking for one when it ends. People dropping out the labor force, means I have less competition. However, I'd hardly call that good for the country as a whole.

[840high]

35. From BBC

he US economy created only 74,000 jobs in December, with many Americans giving up looking for work, latest figures show.

The number of jobs created was the lowest for three years and was well under half the number expected by analysts.

The US unemployment rate fell to a five-year low of 6.7%.

However, that was mostly due to a drop in the number of Americans looking for work as they become discouraged

[DesMoinesDem]

36. 40k of the 74k were temp jobs.

not good

[JoePhilly]

39. And all at McDonalds.

Clearly.

[DesMoinesDem]

43. Um, ok. I have no idea what that means.

[jeff47]

53. It means Joe only wants to talk about the percentage

And doesn't want to talk about any of the numbers behind that percentage.

[Kingofalldems]

42. Obama is a communist and a Muslin

[Dopers_Greed]

49. Lemme guess...

Those numbers are cooked?

[DCBob]

50. For those that think this is just a result of people giving up.. see this..

"U-4 Total unemployed plus discouraged workers, as a percent of the civilian labor force plus discouraged workers" also declined from 7.4% (Nov) to 7.2% (Dec)

http://www.bls.gov/news.release/empsit.t15.htm

[Morganfleeman]

54. It's not that simple

A discouraged worker is one who can work and has looked for work in the past 12 months. If the last time they looked for work was 12 months ago, then in the following month, assuming s/he doesn't look for work that person completely drops out of the labor force. The term "discouraged worker" is to some degree a misnomer because someone who last looked for work 18 months ago and who is able to work is clearly discouraged, but they are not counted as such in the BLS numbers. They are counted as not in the labor force.

This is just one of the many factors that pushes the labor participation rate down. While we have made a lot of progress since the depths of the financial crisis, there is still a long way to go. We have a serious problem with long term unemployed right now which needs to be addressed or the labor participation rate may continue to fall and you will have fewer workers to support the ageing population.

Interestingly, short term unemployment (5 weeks or less) is slightly lower than it was in 2007. The real problem is those unemployed longer than that. Long term unemployed, eventually become discouraged, and then drop out of the labor force altogether.

[DCBob]

55. If someone who is unemployed hasnt even tried to look for work in the past 12 months..

then it's obvious they aren't interested in working... imho.

[progree]

58. Mean Mean Mean !!! It shouldn't be necessary to look for work, I guess n/t

[Doctor_J]

57. well aren't you just a big wet blanket

Hey, they are trying to have a party here. Take your facts somewhere else.

[Doctor_J]

56. this doesn't match what I see in real life

I guess it means what it means, but anyone who really thinks things are improving is looking in the wrong direction.