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The Employment Situation, January 2010

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.

Average Nonfarm Employment Change

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
  1. a. Includes construction of residential buildings and residential specialty trade contractors.
  2. b. Includes construction of nonresidential buildings and nonresidential specialty trade contractors.
  3. c. Financial activities include the finance, insurance, and real estate sector and the rental and leasing sector.
  4. 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.

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