Five things to watch in today's jobs report
All eyes will be on the Bureau of Labor Statistics at 8:30 Friday morning, when the agency will release a much-anticipated report on the employment situation in December.
There has been a string of promising economic data in recent weeks, offering hope that the labor market was finally picking up as 2010 ended. The jobs report will offer the most important evidence yet of whether that rising optimism is justified.
Economists expect employers will have created 150,000 net new jobs in December, a sharp improvement from the 39,000 jobs added in November. That, they estimate, would be enough to drive the unemployment rate down to 9.7 percent, from November's level of 9.8 percent.
Those results would be consistent with other recent labor market indicators. The number of people filing new claims for unemployment insurance benefits fell to its lowest level since 2008 in late December, and payroll processing firm ADP said Wednesday that it estimates private employers created a stunning 297,000 jobs in December. However, November's jobs report was a disappointment, showing much weaker job creation than analysts had expected, so there are no guarantees that the official Labor Department numbers will match other indicators.
Here are the things to watch in the report beyond what happens to overall job growth and the unemployment rate.
Revisions: That disappointing November number may well be revised upward as the Labor Department incorporates more complete information from the employers surveyed. That would be a good sign that the earlier, weak job growth number was more a statistical aberration than a trend.
State government payrolls: Analysts expect for private payrolls to grow even faster than total payrolls, with 175,000 new jobs from private employers expected. Translation: 25,000 government jobs are expected to have been slashed, primarily due to state and local governments responding to their big budget gaps by cutting back. This is likely to be an ongoing drag on economic growth through 2011, and the number of state and local job losses will give a good indication on how big a drag they are likely to be.
Change in the labor force: While the unemployment rate will get plenty of headlines after the release, its components are more important. The big question is whether the labor force is growing or shrinking. If more people decide to look for work, it could be a sign of confidence in the job market, yet drive the unemployment rate up a bit due to the lag between when they start looking for a job and when they find one. Conversely, if people give up looking for a job out of frustration, it would lead the unemployment rate to drop because they no longer count as unemployed.
Weekly hours and earnings: The question for the economy is not just how many jobs are created, but what kinds of incomes people who have those jobs are earning. Economists are projecting that average hourly earnings rose 0.2 percent in December while the average workweek will stay unchanged at 34.3 hours. If either of those figures is better than expected, it would mean more money in workers' pockets and bode well for the economy in 2011.
"Real" Unemployment: Besides the unemployment rate that is widely cited and discussed -- 9.8 percent in November -- there is a broader definition of joblessness that offers a more complete picture of how many people are struggling. U-6, as it is known, captures not only people who do not have a job but are looking for one, but also people who are working part time but want a full time job, and people who want a job but have given up looking for one. The rate was unchanged at 17 percent in November, and it would be a welcome sign for American workers if it started falling in a significant way.
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| January 7, 2011; 7:00 AM ET
Categories: U.S. Economy, U.S. Labor Department, Unemployment
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