A Strong January Employment Report

Tom Cunningham, PhD
February 7, 2020
Read Time: min

This morning’s Employment Situation report from the Bureau of Labor Statistics showed decent strength in labor markets.  In January, there were 225,000 new jobs added, significantly higher than the 161,000 jobs predicted. The headline unemployment number (U3), which was expected to remain unchanged, ticked up one-tenth to 3.6%. Job gains were strongest in construction, health care, and transportation and warehousing. Some of the strength in construction could be attributed to an unusually warm month that didn’t suppress construction activity. Hourly earnings rose 3.1% year-over-year.

This month’s release incorporates the annual benchmark revisions, as well as some technical adjustments to the construction of some of the series. The big news here is that the revisions lowered the level of employment by about 500,000 jobs.  That is, after reconciling the reported data with other available data (mostly tax data), the level of reported employment was adjusted down, net by about 500,000 jobs, but with month-to-month variability over the last 12 months.

Also, as a result of these revisions, the broadest measure of labor underutilization (U6) has been revised down notably. The January number is 6.9%, up two-tenths from the revised 6.7% in December.  This number stood at a revised 8.0% in January of 2019.

While the downward revision in the level of employment is a little large by historic standards, that doesn’t take much away from the decent strength shown in the monthly change.

About the Author

Tom Cunningham, PhD

Tom joined the Federal Reserve Bank of Atlanta as an economist with the macropolicy group in 1985. He was promoted to senior economist in 1989 and to research officer and senior economist with responsibility for the regional group in 1992. Cunningham retired in 2015 after a 30 year career. He has recently joined the Metro Atlanta Chamber’s leadership team as chief economist. Cunningham’s deep experience covers all aspects of applied economics and real estate trends, and he is a specialist in macroeconomic policy and regional analysis. Throughout his career, he has interacted with multiple business leaders and companies in the Southeast, and has deep knowledge and expertise in areas such as real estate mortgage, mortgage finance, insurance, capital markets, transportation and government.

Full Bio

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