January jobs report to offer important read on economy
There has been plenty of economic data lately pointing to better times ahead. Just this week, a key survey of manufacturers showed the strongest pace of expansion since 2004, and the number of people filing claims for jobless benefits fell sharply.
But Friday morning's report on the employment situation is the acid test of whether those optimistic signs are translating into real job creation and progress at reducing unemployment. The Labor Department will report job growth and unemployment data at 8:30 a.m.
It is the most important monthly report on the economic calendar, the ultimate barometer of progress--or lack thereof--toward a healthier economy for the nation's 15 million unemployed.
Economists are forecasting a gain of 145,000 jobs in January, which would be slightly more than the 130,000 or so needed to keep up with population growth. They expect the unemployment rate to edge up to 9.5 percent, as more people who had given up looking for work return to the labor market. Forecasters are also expecting for average hourly earnings to edge up 0.2 percent and for the length of the average workweek to be unchanged at 34.3 hours.
Sharply higher job growth would be a welcome surprise. The nation added 103,000 jobs in December, fewer than are needed to keep up with population growth. The good news in the December report was that the unemployment rate fell to 9.4 percent, from 9.8 percent--but even that news was not as good as it seems, as about half of the improvement came from people dropping out of the labor force, rather from than people getting jobs.
One thing to watch for: The impact of weather. Snowstorms across large parts of the nation in mid-January could distort the numbers, though just how much is hard to predict. When cities and businesses shut down because of snow, they tend not to add people to their payrolls. The Bureau of Labor Statistics will likely explain in its news release announcing the data whether it thinks weather disruption had a substantial effect on the numbers.
"The fundamentals have been strong, with accelerating GDP growth, signs of a pickup in job openings, and a declining trend of layoffs in recent months," said Andrew Tilton, a Goldman Sachs economist, in a report Thursday. "But very cold and snowy winter weather--including a 'major' snowstorm in the January payroll survey week--likely kept some people from getting to work, suppressing the payroll count."
| February 4, 2011; 6:00 AM ET
Categories: U.S. Economy, U.S. Labor Department
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