This is a very strange jobs report from the Labor Department. The economy gained a paltry 36,000 jobs in January according to the report, which is far below expectations and a real disaster for the economy. Nevertheless, the topline unemployment rate fell 0.4% to 9.0%.
How does this happen? Well, January is always a month when the establishment survey gets revised. New population estimates get incorporated into the survey, and the seasonal adjustment factors get updated. So there is a difference in the January survey of 600,000 less unemployed people; that number is down to 13.9 million according to the BLS (Bureau of Labor Statistics).
Does this mean that those people got a job in this month? Not really. The employment/ population ratio rose slightly to 58.4%, and the labor force participation rate declined to 64.2%, the lowest rate since the early 1980s. Basically, the drop in the topline unemployment rate is entirely due to changes in the total population estimates and other adjustments.
The unemployment rate was 9.8% two months ago, and now it sits at 9.0% with very few jobs gained. The monthly revisions for November and December went up, with +93,000 in November and +121,000 in December. But those are underwhelming numbers, and January is even worse. Don’t be fooled by that topline number.
What’s likely to happen in the next few months is that job growth may accelerate (some are blaming the weather for the anemic job growth in January) but that topline rate will increase as well.