Latest U.S. Unemployment Report ‘Better than We Feared’
With the unemployment rate holding steady in Friday’s jobs report, we turned to Joel Naroff, founder and president of the consulting firm Naroff Economic Advisors, for a deeper look at the numbers and the health of the overall economy.
What’s the takeaway from this report of 36,000 jobs lost and the overall jobless rate holding steady?
JOEL NAROFF: It’s an awful lot better than we all feared. This is a situation where expectations trump reality. It’s not nice to see another 36,000 jobs lost, but with the winter weather bashing so many parts of the country, the fears were that we could be seeing 100,000 jobs lost and the rate up to 10 percent. Given those possibilities, this seems to say that the labor market may be in better shape than we thought.
That isn’t to say it’s in good shape — we don’t expect jobs to start flowing like a river. But you have to stop falling before you can start rising. And I think we are on the cusp of a long rise, which could start as early as next month.
What effect did the snowstorms last month have on the report?
JOEL NAROFF: There’s a lot of uncertainty. The [Bureau of Labor Statistics] tried to explain it with a reminder that all you have to be is employed and paid for one hour during the period that they are surveying to be considered employed. That’s the first key thing.
But if you were part time and [couldn't make it] to work Thursday or Friday [during the storm], you may not have gotten paid and that’s the end of that. But all of those unemployed people who were out shoveling for businesses, construction workers with plows, they are getting paid. So, some of the losses may have been offset. But the net effect is really unclear.
The dynamics of the labor market are enormous and there may be a million people who go off and on jobs in any given period. Some get jobs, some retire. Clearly when weather comes into play, some people don’t get brought in, some have start dates put off and it has a temporary effect. We’ll have a better idea next month.
The number of underemployed — part-time workers wanting full-time work — rose slightly, though the number of long-term employed fell for the first time since November 2008. Is that encouraging?
JOEL NAROFF: Month-to-month, it’s always a little bit difficult. We have to look at it over a trend. When we look at some of these numbers, they are either not rising nearly as rapidly as they have been or they are stabilizing. But they are still, to a large extent, not good. But you have to look at 3- to 6-month trends.
What does this report say about the health of the overall economy?
JOEL NAROFF: Manufacturing posted a gain. It was only 1,000 jobs, but I’ll take 1,000 up over down any day. It means that the manufacturing sector is now no longer restraining job growth. We aren’t going to look for it to add huge numbers, but positive is good. Employment services were also up. What businesses tend to do, when they get ready to hire, is they hire part time, and we see more and more of those temp workers being hired. It was also nice to see hospitality move up – it means people are spending money on leisure and things that make them feel better. We’ve seen bunker mentality for a long time.
We aren’t going to get constant gains even when we start going forward. It will be volatile, we may see it go up a lot and then down again. But in a variety of sectors, both people and businesses are spending more money and that’s telling the firms to start hiring. It won’t necessarily come from one sector leading the sway but the weak sectors not being weak anymore.