Breaking Down the Latest Jobless Numbers

A mixed message on the jobless front today: The overall unemployment rate fell from 10 percent to 9.7 percent. But the Labor Department also released revisions to some monthly data from last year showing the economy has shed far more jobs than previously thought.

To make sense of the latest numbers, we spoke to Stuart Kirk, U.S. Lex editor for the Financial Times in New York.

With the unemployment rate dropping today, is it a sign the economy is turning a corner?

STUART KIRK: It’s very difficult to say. Everybody looks to these unemployment numbers once a month, and I think the surest indication of what people think of this number is that markets have been completely flat today. Why is that? There are some good things and there are some bad things in these numbers. The headline payrolls number is minus 20,00 and I think people were hoping for a mildly positive number – maybe plus 15,000.

The important thing for your readers to appreciate is that the margin for error in these numbers by most statisticians is around 50,000. So anything between zero and 50,000 on both sides of zero you might as well consider to be about flat. The other thing to appreciate is just how big revisions are to these numbers. They released numbers [today] that show for last year that there were 600,000 fewer jobs created than they thought. That’s a big revision. So the thing to remember is that these numbers are very rough.

A few of the positive things:

Temporary employment was up. That’s a good thing for the economy. That shows companies are beginning to employ temporary workers, and then hopefully they’ll begin to employ full-time workers. The working week was up — i.e. the the number of hours worked — was just ticked up slightly. That hopefully means we’re being paid more and we’ll spend more, so that’s good for the economy. And for the first time in 2-3 years, manufacturing employment was up about 11,000. Again, you have to qualify to say that these numbers are very rough —but that’s a positive as well.

On the negative side: There were these big revisions down. December, for example, which we were all excited last month because we thought it was only down about 85,000, turned out to be down about 150,000. Construction still seems to be losing jobs at a great rate. And parts of government are losing jobs. Overall, these numbers are better than we have seen in the past few months but there is absolutely no sign that corporate America is all of sudden rushing out and hiring people. I think the unemployment rate will hover in the short of 8-9-10 percent range for awhile to come.

The revisions released today showed that the economy has actually shed far more jobs — 8.4 million — since the start of the recession than we previously thought. What kind of effect will that have on confidence and hiring?

STUART KIRK: The thing about revisions is that the [numbers] are revised so that there’s hopefully a higher degree of accuracy. So all those [additional] unemployed people — they will have the repercussions on spending and consumption. It’s obviously a negative. The headline will affect people’s confidence too, and then you have all the trickle down in mortgages and the housing market. But it simply means the economy needs to generate way more jobs than we thought before the revisions.

Underemployment, which includes part-time workers looking for full-time work, fell to 16.5 percent from 17.3 percent. Is that a promising sign?

STUART KIRK: It’s still a high number but the fact that it fell is definitely a positive. When economies slowly start to improve, you tend to see those things improve first. So the people who didn’t want to enter the job market at all are the fist ones to reenter and that trickles into part-time work, temp work, and then eventually full-time work. So that is definitely a positive sign and we’ll have to watch that over the next few months and hope that that continues to improve.

Tune in to Friday’s NewsHour for more analysis and perspective on the new job numbers.