Positive Opening to 2017 on the Jobs Front
By Ray Keating at 3 February, 2017, 12:21 pm
The January employment report from the U.S. Bureau of Labor Statistics pointed to a solid start for job creation in 2017.
Each year, the January jobs report requires a bit of sorting. As always, there are two surveys that make up the jobs report. The establishment (or payroll survey) showed a gain of 227,000 in employment for January. That’s a respectable level (though in a strong economy, we should be above 250,000). It’s also a welcome step up from three sluggish months in a row.
Then there is the household survey, from which we get the unemployment rate, and more telling data, such as the labor force participation rate and the employment-population ratio. It’s also worth noting that the household survey also tends to better capture startup and small business activity on the jobs front compared to the payroll survey. As for the January data, it brings population adjustments that make the data not comparable to the December data. However, another part of the report does offer a look at the unadjusted month-to-month change in the labor force, employment, etc.
That month-to-month look at comparable data points to far more robust activity on the jobs front versus the payroll data. For example, the labor force saw a big increase of 584,000, and employment leaped higher by 457,000. It also should be noted that month-to-month data in the household survey are more volatile.
In terms of what is clearly comparable, the labor force participation rate increased from 62.7 percent in December to 62.9 percent in January. Of course, that still well below where it should be during a period of economic growth, such as when it ran above 66 percent prior to the last recession.
Also, the employment-population ratio rose from 59.7 percent in December to 59.9 percent in January. Again, though, this level still compares poorly to where it should be. Again, for example, prior to this last recession, the ratio came in at or above 63 percent. As noted in SBE Council’s October 2016 report – Gap Analysis #6: America’s Lost Jobs — the U.S. faces a daunting jobs shortfall.
Let’s hope that some of the positive signals offered in the January jobs report will take hold, being driven ahead by a positive shift to pro-growth policies, such as tax and regulatory relief and reform, free trade, reining in government spending, and sound monetary policy.
Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.
Keating’s latest book published by SBE Council is titled Unleashing Small Business Through IP: The Role of Intellectual Property in Driving Entrepreneurship, Innovation and Investment and it is available free on SBE Council’s website here.