A Sobering Jobs Report

Today’s jobs report invites both negative and positive interpretations.

The positives are fewer, so let’s start with them:

• With job losses of 85,000, December was the second-best (or, if you prefer, second-least-bad) month since January 2008.

• With today’s revisions, November actually showed job gains of 4,000, the first increase since December 2007.

• Put that all together, and job losses averaged 69,000 per month in the last quarter of 2009. That’s unwelcome, but much better than the average of 691,000 jobs lost in each of the first three months of the year.

• Employment in temporary help services–often viewed as a leading economic indicator–increased by 46,500 in December.

And here are the negatives:

• December’s job losses were much larger than most forecasters had predicted.

• The upward revision to November job growth happened only because October jobs were revised down, making November look better. The actual level of November jobs was also revised down (by 1,000).

• Although the unemployment rate was steady at 10.0%, the details beneath that figure were horrible. Household-reported employment fell by 589,000; the only reason that the unemployment rate stayed constant is that even more people–661,000–dropped out of the labor force.

• The labor force participation rate thus fell to 64.6% and the employment-to-population ratio fell to 58.2%, the lowest since 1985 and 1983, respectively.

• The underemployment rate (U-6) increased to 17.3%.

Bottom line: The economy is growing (as suggested by other data), but that growth is not yet translating into new jobs.