Meet the Author

Murat Tasci |

Research Economist

Murat Tasci

Murat Tasci is a research economist in the Research Department of the Federal Reserve Bank of Cleveland. He is primarily interested in macroeconomics and labor economics. His current work focuses on business cycles and labor markets, labor market policies, and search frictions.

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Meet the Author

Beth Mowry |

Research Assistant

Beth Mowry

Beth Mowry was formerly a research assistant in the Research Department of the Federal Reserve Bank of Cleveland. Her work focuses on labor markets and business cycles.

02.08.10

Economic Trends

The Employment Situation, January 2010

Murat Tasci and Beth Mowry

Nonfarm employment was essentially unchanged in January, declining by just 20,000 jobs, following a downwardly revised loss in December (from 85,000 to 150,000) and an upwardly revised gain in November (from 4,000 to 64,000). Monthly revisions result from additional sample reports and the monthly recalculation of seasonal factors. In the case of the current Employment Situation release, the annual benchmark process also contributed to November and December’s revisions. Since the start of the recession in December 2007, payroll employment has fallen by 8.4 million. Over the past three months, however, average employment decline has slowed considerably.

In January, the number of unemployed persons dropped a substantial 430,000, while the labor force expanded by 111,000, resulting in a decline in the unemployment rate of 0.3 percentage point, to 9.7 percent.

The improvement in January payrolls from December’s much larger loss was due almost entirely to progress in service-providing industries. Job losses in goods-producing industries as a whole remained roughly the same month-to-month, at 60,000. Losses steepened in construction, from 32,000 in December to 75,000 in January, while the manufacturing industry actually added to payrolls for the first time in three years (11,000).

Service industries tacked on 40,000 jobs in January after a 96,000-drop just one month earlier. The improvement was broadly shared, resulting from a turnaround in retail trade (from −18,000 to +42,000 jobs), a larger gain in professional and business services (from 20,000 to 44,000), and from smaller losses in leisure and hospitality (from −41,000 to −14,000) and government (from −27,000 to −8,000). Temporary help services has charted solid gains for four straight months now, adding 52,000 jobs in January.

Labor Market Conditions and Revisions

 
Average monthly change (Thousands of employees, NAICS)

November
current

Revision to November

December
current

Revision to December

January
current
Payroll Employment
64
60
−150
−65
−20
Goods-producing
−33
25
−54
27
−60
Construction
−15
12
−32
21
−75
Heavy and civil engineering
4.1
2
−9
9
0
Residentiala
−2.8
2
−2
16
−15
Nonresidentialb
−16.5
8
−20
−4
−60
Manufacturing
−25
10
−23
4
11
Durable goods
−23
6
−15
1
13
Nondurable goods
−2
4
−8
3
−2
Service-providing
97
35
−96
−92
40
Retail trade
9
22
−18
−8
42
Financial activitiesc
2
8
−7
−11
−16
PBSd
106
17
20
−30
44
Temporary help services
95
40
59
12
52
Education and health services
31
−6
26
−9
16
Leisure and hospitality
−21
−8
−41
−16
−14
Government
−11
−15
−27
−6
−8
Local educational services
13
−2
−13
−11
−11
  1. Includes construction of residential buildings and residential specialty trade contractors.
  2. Includes construction of nonresidential buildings and nonresidential specialty trade contractors.
  3. Financial activities include the finance, insurance, and real estate sector and the rental and leasing sector.
  4. PBS is professional business services (professional, scientific, and technical services, management of companies and enterprises, administrative and support, and waste management and remediation services.
  5. Source: Bureau of Labor Statistics.

The Diffusion Index of Employment Change rose 5.5 points to 46.8, a step closer to striking a balance between industries increasing and decreasing employment. The index currently matches its recent high of November 2009 and has climbed all the way from a record low of 19.6 in March of that year.

This month’s Employment Situation release coincides with the Bureau of Labor Statistics’ annual benchmark revision process. Establishment survey data since April 2008 have been revised to reflect unemployment insurance tax records and updated adjustments to models of net business births and deaths. Also, data from January 2005 forward incorporate updated seasonal adjustment factors. Revision caused average monthly payroll losses for 2008 and 2009 to increase by roughly 50,000. In 2008 an average 302,000 jobs were lost on net each month, and average losses in 2009 were 398,000. Adjustments for August through October 2008 were particularly substantial, adding a total of 470,000 additional losses to those months’ figures.

Labor Market Conditions

  Average monthly change (Thousands of employees, NAICS)

2006

2007

2008

2009

January 2010
Payroll employment
172
90
−302
−398
−20
Goods-producing
2
−37
−139
−199
−60
Construction
13
−17
−66
−84
−75
Heavy and civil engineering
3
0
−7
−10
0
Residentiala
−5
−23
−43
−32
−15.1
Nonresidentialb
15
6
−16
−42
−60.2
Manufacturing
−16
−23
−75
−108
11
Durable goods
−5
−17
−54
−84
13
Nondurable goods
−11
−6
−21
−2
−2
Service-providing
170
126
−163
−199
40
Retail trade
4
14
−59
−42
42.1
Financial activitiesc
9
−10
−19
−28
−16
PBSd
43
23
−69
−61
44
Temporary help services
1
−8
−42
−11
52.0
Education and health services
39
43
40
26
16
Leisure and hospitality
32
20
−24
−22
−14
Government
17
24
15
−7
−8
Local educational services
6
8
3
−4
−10.5
  Average for period (percent)
Civilian unemployment rate
4.6
4.6
5.8
9.2
9.7

a. Includes construction of residential buildings and residential specialty trade contractors.
b. Includes construction of nonresidential buildings and nonresidential specialty trade contractors.
c. Financial activities include the finance, insurance, and real estate sector and the rental and leasing sector.
d. PBS is professional business services (professional, scientific, and technical services, management of companies and enterprises, administrative and support, and waste management and remediation services.
Source: Bureau of Labor Statistics.