An Excellent Jobs Report for January

By at 7 February, 2020, 11:01 am

by Raymond J. Keating-

The U.S. Bureau of Labor Statistics employment report for January 2020 painted a strong jobs picture across the board.

Establishment Survey: First, the establishment survey pointed to payroll gains of 225,000 in January. Whenever payroll gains for the month come in well above 200,000, it’s a big plus.

Household Survey: Second, the household survey – which better captures small business and start-up activity – has to be sorted out due to population changes/updates in the survey. When factoring out those changes in order to get a comparable month-to-month comparison with December 2019, it turned out that the labor force grew by a robust 574,000 in January, and employment jumped by 418,000.

Positive Movement in Labor Force Participation: Third, considering that the civilian noninstitutional population increased by 132,000, that means that those not in the labor force dropped by 442,000. So, people were moving off the sidelines and into the labor force.

Fourth, as opposed to the unemployment rate, the truly significant percentages in each month’s employment report are the labor force participation rate and the employment-population ratio. These are packed with the most relevant information. The labor force participation rate shows the share of working age people that are either working or looking for work, while the employment population ratio captures the percent of working age people with employment.

The labor force participation rate for January 2020 increased from 63.2 percent in December to 63.4 percent. While still notably short of the pre-recession levels, that was the highest rate since mid-2013. (See the following chart.)

Source: Federal Reserve Bank of St. Louis, FRED

And as for the employment-population ratio, it increased from 61.0 percent to 61.2 percent. Again, while short of pre-recession marks, the January 2020 ratio was at its highest since late 2008. (See the following chart.)

Source: Federal Reserve Bank of St. Louis, FRED

That’s a noteworthy achievement for the entrepreneurs and businesses creating jobs in our economy.

The labor market showed continued strength during the first month of 2020, and of course that is very welcome news.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.


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