Thursday, March 21, 2013

Employment up in January 2013, unemployment rate falls to 7.6 percent

The non-seasonally-adjusted unemployment rate fell from 8.8 percent during January 2012 to 7.6 percent during January 2013. This large downward movement reflects a new revision in the employment data for January of last year, in which the unemployment rate is now reported as being higher than what was previously reported.

According to the most recent employment data, collected through the Household Survey and released this week by the Colorado Department of Labor and Employment and the BLS, both the labor force and the employment total increased from January 2012 to January 2013, with the labor force rising 0.04 percent, and total employment rising 0.6 percent, year over year.

With the labor force growing less than total employment, the unemployment rate dropped.

During January 2013, the labor force consisted of 2.74 million workers, while total employment was at 2.53 million employed persons.

According to the Household Survey employment totals, total employment remains approximately 98,000 employed persons below the employment peak reached during July 2008.

The first graph shows the unemployment rate (not seasonally adjusted):

The unemployment rate inches downward, helped along by little labor force growth and some small gains in total employment.

The second graph shows total employment. is up from levels seen during 2009 and 2010, but for the past six months or so, has been flat.  Given January 2012's upward revision in the unemployment rate, it may be that revision numbers, still unavailable for most of 2012, will show more improvement over the past six months.  Total labor force is nearly back to peak levels.

Total employment, according to the Household Survey, is now back at levels reported during early 2007.

The employment situation looks difference if we consult the other measure of employment, The Establishment Survey. This is a survey of payroll employment at larger employers.

The third graph shows payroll employment collected through the Establishment Survey of employment, and shows the year-over-year change in payroll employment in Colorado. While the Household Survey showed employment remaining flat year over year, rising by only 0.3 percent, the Establishment Survey shows total payroll employment growing by 2.7 percent (or 61,000 jobs) from January 2012 to January 2013, which is a much larger gain. The Establishment survey uses a larger sample size, but does not measure employment activity among small firms.

Year-over-year growth in the Establishment Survey has usually been at or under 2 percent since the last recession, and this is generally a smaller growth rate than what was common during the last expansion from 2003-2008. The 2.7 percent growth rate during January, however, is the largest growth rate we've seen in the payroll survey since 2006.

The very large losses that occurred during 2009 and 2010 were the largest losses, by percentage, in at least 30 years. Job gains in recent years don't compare with the robust job gains seen during the boom years of the 1990s.

Taking seasonal issues into account, employment, as measured by the Establishment Survey, is essentially back to peak levels - 2.3 million payroll jobs or so. 

This disparity between the Household Survey and the Establishment survey can be interpreted in a variety of ways.  It certainly suggests that job growth among larger employers has been solid over the past year. The small job gains in the Household Survey, however, suggests that employment among the self employed, and those at small firms has been less robust.