WASHINGTON — The U.S. January employment report is weak on its face, representing a recession-type report, and remains weak even after accounting for a possible effect on state workers from the mid-month bank holiday.

U.S. January payrolls posted a 17,000 decline. The last time payrolls dropped was August 2003, in the aftermath of recession. Moreover, the December- net payroll revisions totaled a mere plus-9,000. The September to December net jobs revision was up 27,000, also barely significant at an average of 7,000 per month.

The payroll benchmark resulted in a 293,000 loss of jobs in the March 2007 reference month, or down 0.2%, within the usual range for revisions, but nonetheless in the minus column. The effect of new seasonal adjustments and job classifications was unclear, but the Bureau of Labor Statistics suggested they were minor.

Perhaps most interesting in the data was the 26,000 drop in state education workers, which pushed the payroll total to its decline. The payroll survey preceded the Jan. 21 Martin Luther King Day holiday, but there is a chance that the holiday helped reduce these jobs. Private payrolls printed up 1,000 in January, up 54,000 in December, and up 44,000 in November, still illustrating a slow-down in the new year.

January’s payroll composition included: manufacturing down 28,000, construction off 27,000, finance down 2,000, administration dropped 21,500, temporary help fell 9,000, and state government education down 26,000, but retail was up 11,200, health care rose 27,100, and restaurants grew 14,800.

The one-month employment diffusion index at 46.2% confirms a very weak labor market.

The civilian unemployment rate remains elevated at 4.9% and prior to rounding edged down just 0.05 point, barely undoing December’s surge. Updated controls in the household survey caused the labor force to be reduced by 637,000, employment to be cut 598,000, and unemployment to be reduced by 40,000, so the rate was little affected. The key employment-population ratio was 62.9% in January, 62.7% in December, and 63.0% in November, so it remains in its recent range.

Average hourly earnings posted up 0.2% for a 3.7% increase over the year. However, hours were lower, suggesting January will see weak industrial production and personal income reports.

— Market News International


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