Payrolls Up 36,000; Unemployment Down to 9.0% – Bad Weather Likely Had Large Effect

The Bureau of Labor Statistics reported that payroll employment rose by 36,000 in January. This follows an upwardly revised gain of 121,000 in December (previously reported to be 103,000). Private sector employment rose by 50,000. This growth rate is very modest and much lower than in recent months. However, the reason for this is most likely due to inclement weather that occurred over much of the country during January and not because of any change in the underlying labor market dynamic. The industries with large changes in net job growth where construction and leisure and hospitality, sectors that are most susceptible to weather.

In December, the unemployment rate fell significantly to 9.0% from 9.4%. However, this was almost entirely due to over 500,000 workers leaving the labor force, not due to new job growth. The labor force participation rate slid to 64.2%, the lowest rate of the cycle thus far. Weather was likely also a major driver here, as many workers stayed home. It is probably the case that the unemployment rate will bounce back up over the next couple of months, once this temporary disruption passes.

	Jan	Dec	Nov	Oct	Sep	Aug
Payroll Change (000s)	36	121	93	171	-29	-59
Goods Producing	18	-7	8	1	-6	-1
Services	18	128	85	170	-23	-58
Private Sector	50	139	128	143	109	110
Unemployment Rate	9.0	9.4	9.8	9.7	9.6	9.6
Labor Force Particip. R.	64.2	64.3	64.5	64.5	64.7	64.7